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Consumer Finance Industry Profile Excerpt
| SIC Codes: 6141, 6162 NAICS Codes: 52221, 52222, 522291, 522292 Page Length: 10-12 Last Quarterly Update: 12/22/2008 View Sample Industry Profile |
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About 5,000 companies in the US engage primarily in making personal loans to consumers, with combined annual revenue of about $40 billion, although industry size is uncertain. Large companies include HSBC, American General Finance, and divisions of large financial companies. Certain segments of the industry, such as unsecured cash loans, are highly fragmented, while others, like credit card lending, have become concentrated in a few large lenders.
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.
PRODUCTS, OPERATIONS & TECHNOLOGY
Consumer finance companies offer the same kinds of loans to consumers that banks and credit unions do, but 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. Several broad subprime product segments exist, and companies may participate in a number of them or specialize in only one: automobile financing; credit card lending (revolving credit); sales financing (typically for furniture, jewelry, or appliances); and unsecured cash loans.
Consumer finance revenue comes ...
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