Definition of Finance Company for Common People

Definition of Finance Company for Common People

For the common people, the definition of a finance corporation is still not fully understood, where they only know that this kind of corporation revolves around financial affairs. However, finance corporations have existed in Indonesia for some time. There are all sorts of financial and financing services in Indonesia for various needs, either for individual or institutional interests. For those of you who still do not understand finance corporations and their functions, here is a comprehensive explanation that can help you.

Definition of Finance Corporation

The existence and mechanisms of finance corporations have been regulated by the state, as written in the Minister of Finance Regulation No. 84/PMK.012/2006 about Financing Corporations. In the same regulation, the definition of a finance corporation is also explained clearly.

The definition of a finance corporation is a business entity apart from banks or non-bank financial institutions, where a finance corporation provides service facilities including loans to customers for different needs.

Different from banks that usually provide funding in cash money for customers, finance corporations do not provide funding in such a manner. Instead, finance corporations offer agreements on their behalf for the customers so that the customers can receive credit funding from the corporations. In other words, the corporations will perform the customers’ credit repayment as the third party.

Although there are people who still do not really understand what a finance corporation is, services of finance corporations have been widely used by modern society. When mentioning a finance corporation or the term financing itself, many people still do not really know the main product of such a company. A different situation might will happen if you mention the term leasing instead, where most people will immediately comprehend the meaning of that term and the way leasing services work.

However, you need to know that leasing or credit services are just one of many examples of services that a finance corporation can offer to you. This is also the reason why the term leasing cannot fully explain the definition of a finance corporation itself.

Finance corporation to help to develop a business

To understand more about the recent explanation of the definition of a finance corporation, you can also recognize several functions of such a corporation.

1. Consumer financing

This financing is focused on businesses that perform goods procurement. The good’s procurement is adjusted based on the market’s demand. Consumers who buy goods in this business are given credit services or the option to pay in installments. Then, the business owner receives financing from the finance corporation to procure the goods without paying the price completely in the beginning.

Read also: Characteristics of Consumer Financing and How It Works

2. Business leasing

This leasing activity is intended to expand the business by purchasing capital goods for production. However, for this particular service, the repayment time duration does not take time longer than two years. The reason is that the production of capital goods can be very expensive in their value.

Finance corporation for other functions

Apart from financing functions for business needs, there are also finance corporations with other functions such as motor vehicles, electronic tools funding, machines or heavy equipment funding, and housework equipment funding.

1. Motor vehicles financing

Considering the highly expensive price of certain vehicles, cash payment for motor vehicle purchases is rather rare. That is the reason why finance corporations provide financing services that enable the customers to meet their needs without price constraints in the beginning.

2. Machines or heavy equipment financin

The next financing function is the procurement of machines or heavy equipment, especially machines that are necessary for a massive production process. These expensive production machines are hard to come by new enterprise owners or small-scale businesses. As a result, this kind of financing for machines can be very helpful for these small enterprises.

3. Electronic tools or housework equipment

Important housework equipment such as refrigerator, dispenser, television, and other things may have considerable prices, and they are included in the finance corporations’ services. With this financing system, you can still meet your housework needs by paying them gradually. This method also enables you to balance earning allocations for other needs as well. Particular kinds of services from finance corporations are made possible because of the well-refined system of their management. That is the reason AdIns offers service packages that can support finance corporations to stay relevant to the market needs. Moreover, by relying on the core system from AdIns that focuses on the finance corporations’ potential growth, you can expect better and satisfying results in the future.

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Published date :

10 April 2021