Consumer Lending Industry Overview

Excerpt from Consumer Lending Report

Companies in this industry make unsecured cash loans to consumers. Major companies include Ace Cash Express, Advance America, Check 'n Go, Check Into Cash, and DFC Global (formerly Dollar Financial), which are all based in the US; other companies include Orient Corporation (Japan) and Tesco Personal Finance (UK).

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 enjoy economies of scale in securing access to capital. Small companies can compete effectively by choosing favorable locations. The industry is capital-intensive: annual revenue per worker is about $400,000. The industry is highly concentrated: the top 50 companies account for about 90 percent of revenue.

Products, Operations & Technology

Consumer finance companies primarily provide unsecured cash or payday loans. Some companies in the industry also offer automobile financing or sales financing (typically for furniture, jewelry, or appliances). Consumer finance companies typically operate in the "subprime" portion of the market. Subprime borrowers may have a history of delinquent loan payments or no credit history, and often have low income and a higher debt-to-income ratio.