Dealer glossary
Related finance company (RFC)
A separate company, affiliated with the dealership, that holds and services the notes the dealership originates.
Definition
Also called RFC
Some Buy Here Pay Here operations put their loan portfolio into a separate but affiliated entity. The dealership sells the car; the related finance company holds the paper.
The reasons are structural - how the businesses are capitalised, how risk sits, and how each is treated for tax and accounting purposes.
Operationally it means the note portfolio has to be accounted for as its own business while still being tied to the deals that created it. Whether an RFC makes sense for a given store is a question for its accountant and attorney.
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