Companies in this industry make unsecured cash loans to consumers. Major companies include US-based DFC Global, EZCORP, First Cash Pawn (formerly Cash America), OneMain Holdings, and SLM (better known as Sallie Mae), along with Provident Financial and Tesco Personal Finance (both based in the UK) and Orient Corporation (Japan).
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 or targeting niche markets. The US industry is highly concentrated: the 50 largest companies account for about 85% of revenue.
Products, Operations & Technology
Major sources of revenue are interest income 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.