Articles > Will there be a sharemarket crash in 2010? > Investing in a finance company
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Investing in a finance companyMany baby boomers may have been caught out by the sudden rash of failures of finance companies. Even if you did not lose money, you will be worried about investing in this sector. I have persuaded an 'insider' to provide me with: The ten most important questions to ask before you invest in a finance company1) Who owns the company and who is running the company ? What is their experience / track record ? 2) How long have they been in business ? 3) Do they have a credit rating from a reputable agency ? What is that rating ? 4) What do they do with the money ? Is the lending secured / unsecured? Over what sort of assets ? 5) Is the return offered a sufficient premium over bank rates of similar terms ? 6) How profitable is the business ? 7) How much cash do they hold as a liquidity buffer ? 8) What are the level of bad debts ? 9) What is the level of related-party lending to the shareholders / directors ? 10) What is the amount of shareholder equity in the business ? Questions kindly supplied by: Neville Giles General Manager, Finance Hanover Group |