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What does a finance company require from a borrower?
AA guarantee from a bank that already knows the borrower
BTangible assets such as a vehicle or machinery as security
CA deposit account held with the same finance company
DA record of steady borrowing over the past five years
Answer & Solution
Correct answer: B. Tangible assets such as a vehicle or machinery as security
1. A finance company makes short-term loans.
2. For each loan the borrower puts up tangible assets as security.
3. Those assets may be an automobile, inventory, machinery or property.
4. A finance company holds no deposits, so it could not ask a borrower to keep an account with it.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.3 U.S. Financial Institutions_
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