Companies in this industry make unsecured cash loans to consumers. Major companies include US-based Cash America, DFC Global, EZCORP, 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).
Worldwide, the value of consumer lending balances outstanding at the end of 2015 was $42.3 trillion, up from $37.1 trillion in 2011, according to CPI Financial. Consumer lending companies generally do business locally or within their country of origin, but globalization and greater access to the internet are spurring companies to pursue international growth. Many US-based companies operate in Mexico, Canada, Europe, Australia, and the UK. Some companies operate online lending websites that can reach customers around the globe.
The US consumer lending industry consists of about 13,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $35 billion.
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.
The federal financial reform law passed in 2010 created a tougher business environment for consumer finance firms. The regulations restrict credit cards companies from...