Consumer Lending Industry Overview

Excerpt from Consumer Lending Report

Companies in this industry make unsecured cash loans to consumers. Major companies include Advance America, Cash America, DFC Global, EZCORP, and Sallie Mae (all based in the US), as well as Provident Financial and Tesco Personal Finance (both based in the UK) and Orient Corporation (Japan).

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 highly concentrated: the 50 largest companies account for about 90 percent of revenue.

Products, Operations & Technology

Major sources of revenue are interest and fees from unsecured cash loans, also known as payday loans because they are often payable on a borrower's next payday. Many large companies in the industry operate in the "subprime" portion of the market and offer loans to customers with limited access to other sources of credit. 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. Companies that originate and manage student loans also are included in the industry.