QandAs: Loans

What is Financing?

Answer:
Financing is the term used to describe funding a purchase, generally through a loan.

Consumer purchases such as a car, a home, or even a computer can be financed. Businesses wishing to expand or start up are often seeking financing as well. Financing is differentiated from a credit card or revolving business loan in that it is for a specific purchase.

Stores that sell large ticket items (furniture, flooring, computers, etc.) often offer their own financing to customers with their own repayment plans. This is called vendor financing. When financing refers to a house or car, it is often called a mortgage or auto loan. Financing options will depend on the purchaser's employment status, credit history, down payment, interest rate and repayment details.