What financial institution issues loans to individuals without accepting traditional deposits like a bank ?
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Answer: B. Finance corporation
Explanation
A finance corporation provides loans and financial services directly to consumers and commercial businesses. Unlike traditional commercial banks, these institutions do not accept public savings deposits. They fund their lending operations through commercial borrowing, equity capital, and debt securities. Financial intermediaries bridge the gap between lenders and borrowers within modern capital markets. Finance companies often specialize in consumer installment loans, auto financing, and commercial factoring. Regulatory frameworks treat non-bank financial corporations differently than insured depository commercial banks.
Consumers frequently use finance corporations to secure personal loans when traditional bank credit is unavailable. An everyday example is an auto finance company providing car loans directly to dealership customers. These institutions play a major role in providing credit to segments of the population underserved by banks. A cooperative company is owned and operated by its members for mutual benefit rather than specialized lending. A limited company is a standard corporate structure providing liability protection rather than a lending institution. Finance company is a synonymous term, but finance corporation specifically highlights the chartered entity.
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