A company advances its own funds to 40 California consumers a year, secured by personal property contracts, and holds no license. Assuming no statutory exemption applies, must the company obtain a finance lender license?
Correct Answer
B) It is a finance lender and needs a license: it is in the business of lending
The Department of Financial Protection and Innovation, the DFPI, licenses finance lenders, and a finance lender is any person engaged in the business of making consumer loans or commercial loans; lending its own money to consumers is exactly that. Other choices: taking security does not remove the license requirement; there is no 50-loan threshold in the definition; and arranging for others describes a broker, which is a second way to need a license rather than the only one. Source: Cal. Fin. Code § 22009
Why This Is the Correct Answer
The Department of Financial Protection and Innovation, the DFPI, licenses finance lenders, and a finance lender is any person engaged in the business of making consumer loans or commercial loans; lending its own money to consumers is exactly that. Other choices: taking security does not remove the license requirement; there is no 50-loan threshold in the definition; and arranging for others describes a broker, which is a second way to need a license rather than the only one. Source: Cal. Fin. Code § 22009
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