Have you ever heard of finance direct? I have. And while I have a pretty good idea what direct financing is, the term "finance direct" was completely new to me. I assumed it was the same thing, only spoken backwards. Maybe someone just wanted to be fancy, I figured. Curious, I went out looking on Google, just to see what a search like "finance direct" would bring.
What I found is that "finance direct" is not the same thing as direct financing, no matter how similar the two of them look. And while it might be a fancy way of wording things, "finance direct" isn't a fancy way of working "direct finance." It's just a fancy name.
You see, "finance direct" only appears as a name of a business. It's not a way of wording "direct finance;" it's just a business name. There are several businesses entitled Finance Direct, that advertise their services on Google - and while they may be using direct financing, that's not why the term came into use.
So, if these companies aren't the same thing as direct finance, what is direct financing?
Well, these companies are working with the name Finance Direct because they want their customers (and potential customers) to get the idea that the businesses can get finances to their customers quickly and directly. Direct financing, on the other hand, isn't a clever business name; it's a simple business term. Direct financing is a way of talking about loans with no intermediary. It means that the customer works directly with the lender, with nobody in the middle trying to get the situation figured out. Nobody is hired to help somebody figure out the terms involved, or translate from financial jargon to ordinary speech. It means that you've got a customer, a lender, and maybe a wooden desk between them.
Direct financing is not the same as somebody advertising "Finance Direct." That doesn't mean that these Finance Direct companies don't deal with direct financing, though. Most of these companies are lenders themselves, who are more than happy to take on a new customer without an intermediary. They function just like any other lender, lending money to whoever needs it, provided they feel the customer's credit history is worth the risk. They might also deal with larger businesses, using lending programs like corporate credit. The main difference between these lenders and the idea of direct financing is that these lenders can also deal with indirect financing, working through intermediaries for some customers. If you've got a good credit history and you're looking for direct financing, Finance Direct might not be a bad search to use; it just means you're going to get a business first, not a general business term.
Direct financing seems very straightforward, like every loan I've ever taken out. Is there an alternative to direct financing?
Well, yes, there is. Indirect financing is just the opposite of direct financing (as the name would suggest.) While direct financing works with a direct connection between lender and borrower, indirect financing does not. Direct financing means you, a lender, and a wooden desk. Indirect financing places a whole new company between you and the lender, where that desk would normally be. This company works as an intermediary between you and your lender.
This may seem like needlessly plugging a middleman into the equation, but it can be helpful. Using an indirect financer can be useful when you need to work with someone who's being difficult, or you don't have the financial experience to navigate an arrangement competently. An intermediary can also be helpful in finding the best loan available, when you're really not sure what you're looking at. It's essentially like hiring an expert to help you in your borrowing decisions.
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