Despite the abundant presence of a variety of finance lender institutions in the United States, many people are unfamiliar with the components that entail the totality of what the job of a financial lender actually is.
To many people, a finance lender is simply a person or institution that goes into the finance business and provides loans to those qualified individuals who have need for such assistance. While this is a decent overview of what the duties of a finance lender actually are, it does not provide an in depth explanation of the profession.
The most common legal definition of a finance lender is that of any individual who is in the business of providing commercial loans or personal loans to private individuals. (Issues of qualified loan recipients is not really an issue as to whether or not the loan is provided in a legal definition sense).
A further expansion of this legal definition of lender would be any individual who is licensed by the state to enter in the business of lending money.
This may bring about the question “Why does a lender need to be licensed by the state?” The answer revolves around the issue of consumer and borrower protection. By licensing the finance lender, the lender is committing to a certain set of rules and a solid knowledge of those rules.
With the addition of a license, there is an implicit acknowledgment of state and federal oversight of the business and ethics practices of the lending institution.
If a borrower has issues or problems with the business practices of the lender, the borrower could then bring up the issues with the state government department that overseas banking regulations and if the lender has been acting improperly, the possibility of license revocation is possible.