# Consumer Loan License vs Sales Finance License *Reviewed 2026-05-15* > Lending directly to consumers and financing purchases through a merchant are regulated differently. Here is how the consumer loan license and the sales finance license compare and which one your model needs. ## Consumer loan license Authorizes a company to make installment or other loans directly to consumers. ## Sales finance license Authorizes a company to purchase retail installment contracts that merchants originate when consumers finance a purchase. ## Comparison | Feature | Consumer loan license | Sales finance license | | --- | --- | --- | | How credit reaches the consumer | A direct loan from your company | Financing arranged at the point of sale by a merchant | | What you hold | A loan you originated | A retail installment contract you purchased from the merchant | | Typical use | Personal installment lending | Auto, equipment, and retail purchase financing | | Rate and fee rules | State consumer-lending limits apply | State retail-installment rules apply | | Surety bond | Often required, amount varies by state | Often required, amount varies by state | ## Which is right for you - Consumer loan license: Choose the consumer loan license if you lend money directly to borrowers and hold the loans you originate. - Sales finance license: Choose the sales finance license if you buy retail installment contracts that merchants write when consumers finance a purchase. Lend directly or finance a purchase A consumer loan license covers lending money straight to a borrower, for example a personal installment loan. A sales finance license covers a different flow: a merchant arranges financing at the point of sale, writes a retail installment contract, and your company buys that contract. The consumer pays you, but the credit started with the merchant, not with a direct loan from you. Because the activities differ, states regulate them under separate statutes with their own rate and fee frameworks, disclosures, and in many cases separate licenses and bonds. A company that both lends directly and buys installment contracts can need both authorizations. As always, the requirement turns on what you actually do in each state, so confirm it state by state before you operate. Our state licensing summaries outline lending requirements by state, and our services cover the filings either model needs. ## Frequently asked questions ### Can one company hold both licenses? Yes. A company that lends directly and also buys installment contracts often needs both. Each activity is licensed on its own terms per state. ### Does buying auto contracts need a sales finance license? In many states, yes. Purchasing retail installment contracts, including auto paper, is commonly what the sales finance license covers. Confirm the requirement in each state.