Consumer finance companies make small, secured, personal loans that are often limited to several thousand dollars.

These companies typically impose higher interest rates and processing fees than banks or credit unions; on the other hand, consumer finance companies tend to be less conservative in making loans and may extend a high-interest loan to applicants who have relatively poor credit histories. The higher cost of the loans is thereby tied to the higher risk assumed by the consumer finance company. Because of this cost, consumer finance companies are not the usual lender of choice for small businesses and entrepreneurs.