Question

Why do finance companies charge higher interest rates on loans than banks do?

Answer 1

Commercial financing institutions generally charge higher interest rates than banks and credit unions, but they are also more likely to approve a loan request. ... "For that reason, they can loan more against the assets. So chances are a smaller business might get a larger loan from a finance company" than from a bank.

Answer 2

They are way more likely to approve a loan request to a singular person, while banks do way more checks and are usually out of bounds for smaller businesses.