0
A Direct Financing example would be Joe Schmoe borrowing $1000 from you and agreeing to pay you back the money plus interest in some amount of time. It is direct because there is no guarantee that Joe will actually make true of his promise. So, you MAY get the money back plus the interest, or Joe may take off to Mexico, never to be seen again, as well as your money.
An example of Indirect Financing would be you depositing $1000 into a bank account and Jo Schmoe asking for a loan from your bank. (We'll skip all the processes involved in getting approved for a loan and just assume that the bank agrees to give it to Joe.) So, the bank says yes and gives Joe the money he asked for, and some of which is taken from your bank account. Once Joe pays everything back, you gain interest for letting Joe borrow some of your money.
Now, this is indirect because you are not physically giving Joe the money like in the previous example, but although the bank does give Joe some of your money, you will not lose any of it if Joe fails to pay back the loan.
Simply put, Direct is unsafe and risky, while indirect is safe and guaranteed.
Read this webpage and things may make more sense: http://www.blurtit.com/q1377846.html
Wiki User
∙ 9y ago
Add your answer:
Earn +20 pts
What are the difference between direct finance and indirect finace?
Indirect Financing: Like the name implies, indirect financing occurs when you go through another institution to secure your loan. In the auto industry, indirect financing entails working through the dealer to finance the purchase. The process is usually obtaining dealer financing, as the dealer does the loan up front and then sells it to a third party lender.Direct Financing: Instead of going through the middlemen to secure the money you need to make your purchase, direct financing allows you to work directly with lenders to secure the best terms and interest rate possible. Once you are approved for a loan through the lender they will give you parameters to stay within by use of a pre approval or even a voucher to pay for your purchase, allowing you to use the money you need to finance your new car at any dealership of your choice as if you where a cash buyer.
Is insurance a direct or indirect expense?
indirect-expense
The federal and state tax on gasoline direct or indirect?
Indirect
Who is Panasonic's direct and indirect competitors?
direct competitor is samsung and LG
Examples of short-term financing?
Bank loans and any other form of external financing
The difference between direct taxs and indirect taxs and give examples of each?
The difference between direct taxes and indirect taxes with examples is that direct taxes come directly from a person's income or personal property taxes. Indirect taxes comes from sales and excise taxes.
When do you say direct and indirect?
Direct refers to something that occurs without intermediaries or interruptions, while indirect means it occurs through intermediaries or has intervening factors. For example, a direct flight goes from one point to another without stopping, whereas an indirect flight may involve layovers or connecting flights.
What are the examples of direct tax and indirect taxes?
...not sure but an direct tax is when you are taxed right then and there and you know about it ...a indirect tax is when you are taxed later on and don't know about it
Some examples of direct material cost and direct labor cost?
examples of dierect material,indirect,labour,and expenses cost
What are the Examples of voluntariness?
The examples of voluntariness are the direct and indirect voluntariness.
Examples of direct and indirect discourse?
Direct discourse: "I am going to the store," John said. Indirect discourse: John said that he was going to the store.
What are 4 examples of indirect democracies?
Direct Democracy: People represent themselves. Indirect Democracy: People elect representatives to represent them. :)
Is shelter an indirect or direct object?
The noun 'shelter' can function as a direct or an indirect object in a sentence. Examples: Our church gave shelter to many of the flood victims. (direct object of the verb) They gave the bus shelter a new coat of paint. (indirect object)
What is direct expenses and indirect expenses?
what is direct and indirect expense
What are the examples of indirect speech and direct speech?
Direct speech involves quoting the exact words spoken by a person, such as "She said, 'I'll see you tomorrow.'" Indirect speech involves reporting what was said without quoting the exact words, such as "She said she would see me tomorrow."
Is most financing in the US done through the direct or the indirect markets?
Most of the financing in the United States, however, is done indirectly through financial intermediaries who substitute their credit for the credit of the borrower (user) of funds.
What are the difference between direct finance and indirect finace?
Indirect Financing: Like the name implies, indirect financing occurs when you go through another institution to secure your loan. In the auto industry, indirect financing entails working through the dealer to finance the purchase. The process is usually obtaining dealer financing, as the dealer does the loan up front and then sells it to a third party lender.Direct Financing: Instead of going through the middlemen to secure the money you need to make your purchase, direct financing allows you to work directly with lenders to secure the best terms and interest rate possible. Once you are approved for a loan through the lender they will give you parameters to stay within by use of a pre approval or even a voucher to pay for your purchase, allowing you to use the money you need to finance your new car at any dealership of your choice as if you where a cash buyer.
