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Now Viewing Discover's competition in: Consumer Finance

Recent Developments

Growth of Value of Outstanding Consumer Loans Slows - The value of unpaid loans that consumer finance companies must collect from US residents rose just 1.7 percent in 2007 compared to 2006, which experts attribute to tightening credit standards caused by problems in the home mortgage industry. Year-over-year growth in unpaid consumer finance loan value averaged 7.8 percent from 2003 through 2006.

Lenders Leaving Student Loan Market - Credit market problems are making securing student loans difficult for many US students, according to BusinessWeek. Of education lenders, 37 have exited or suspended their participation in all or part of the federally guaranteed Federal Family Education Loan Program, according to FinAid.org. Students must start earlier and work harder to ensure that they can borrow all they need, according to the National Council of Higher Education Loan Programs.

Legislation Targeting Credit Redlining may Expand - The US government is considering expanding the Community Reinvestment Act (CRA), which is intended to eliminate the practice of systematically denying loans to residents of largely minority or low- and middle-income neighborhoods regardless of individuals' creditworthiness. The chair of the House Financial Services Committee supports a bill that would extend CRA coverage to all lending institutions. Both CRA supporters and critics complain that the government's handling of CRA has been at least partially responsible for problems in the housing industry.

Competitive Landscape

Demand is driven by consumer income and demographics. The profitability of individual companies depends on the correct assessment of repayment likelihood and effective collections activities. Large companies have an advantage in using computers to serve large portfolios of mortgage and credit card loans, and also have access to cheaper sources of funds, but small companies can compete effectively in the cash lending or sales finance segments, where personal contact is more important.

Full Industry Overview For Consumer Finance

Consumer Finance Industry Forecast

from Hoover's/D&B subsidiary First Research

The output of US credit cards and finance companies, which includes consumer finance, is forecast to grow at an annual compounded rate of 5.7 percent between 2007 and 2012.

Credit and Finance Companies Growth Steady

First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.