Wiley GAAP 2008

Definitions of Terms

Accounts receivable loan	A loan collateralized by the accounts receivable of the borrower.
Dealer reserves	Finance company liabilities for dealers' shares of finance charges on retail contracts purchased from dealers.
Direct consumer loan	A two‐party transaction in which the finance company lends funds directly to the borrower; such a loan may or may not be collateralized.
Discount	Amount deducted from the face value in advance as a charge for the loan or a deduction for interest at the time of the loan or any charge for credit that is precomputed and included in the face of the instrument.
Discount loan	A loan that is written with the interest or finance charges included in the face amount of the note. Discount loans are also called precompute or add‐on loans.
Effective interest rate	The implicit rate of interest based on the amount advanced and the amount and timing of the specified repayments over the period of the contract.
Factor	A company that engages primarily in factoring.
Factoring	Purchase, usually without recourse, of individual accounts receivable arising in the client's ordinary course of business. Under a factoring agreement, the finance company also provides credit checking, collection, and recordkeeping services.
Floor plan checking	Physical inspection of dealer's inventories that are collateral for advances to the dealer to be repaid from the proceeds from sale of specific items. Sometimes referred to as floor plan auditing.
Floor planning	Financing of dealers' ...