Consumer Lending NAICS 522291
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Industry Summary
The 2,800 consumer lending companies in the US, also known as “payday lenders”, provide unsecured short-term loans to consumers experiencing cash flow shortfalls. About 3% of all adult Americans have used a payday loan. Companies may also provide student loans and loans secured by real estate or automobiles. Some firms also provide other personal financial services, such as check cashing, money orders, and wire transfers.
Negative Public Perception
With annual interest rates of almost 400% and a customer base consisting primarily of low-income borrowers, many consumer advocates view payday loans as predatory lending that takes advantage of the working poor.
Increasing Regulation
The controversy over payday loans has led to new regulations and restrictions in some states and ongoing scrutiny by federal and state regulators.
Recent Developments
May 2, 2025 - Student Loan Collections Could Lower Millions of Credit Scores
- About 5 million student loan borrowers will have their outstanding balances sent to collection agencies by the Department of Education on May 5, potentially negatively affecting credit scores for millions. If a student loan borrower hasn’t made a payment in more than 270 days the loan is considered in default. When that happens with a federal student loan, the government can send it for collections, garnish wages, or take Social Security funds or income tax refunds. The situation dates back to President Biden pausing student loan payments for 12 months in 2023, and did not count late payments towards default. That moratorium ended in October 2024, and with the announcement of collections resuming under Trump, almost 9 million student loan borrowers will automatically be deemed delinquent in their payments. Delinquency can cost a borrower an average of 170 points on their credit rating, per the New York Federal Reserve.
- US consumers owed $17.57 trillion in debt as of Q3 2024, per credit agency Experian, a 2.4% increase from the same period in 2023. While the debt is lower than it has been since 2022, digging deeper into the data reveals some unwelcome trends. Second mortgages and credit card debt - lending areas which typically deal with customers in financial straits and have high interest rates - rose the most in 2023-2024; 9.7% and 8.6%, respectively. Credit card debt alone averages out at about $10,000 per American family, according to consumer finance site WalletHub, and averages a 22% annual percentage rate. The biggest drop in debt came from student loads (-16.8%) due largely to loan forgiveness programs under President Biden. When Experian looked at debt by generation, Gen Z had the most (30%) while Gen X had the least (1.5%).
- So-called "earned wage access" (EWA) programs, which allow workers to take a portion of their paychecks before payday, often for a fee, have grown rapidly, according to CNBC. EWA programs, which operate either directly to the consumer or through employers, may reduce demand for payday loans. In the employer-sponsored market, $9.5 billion in wages was accessed early during 2020, triple the $3.2 billion in 2018, according to Datos Insights. The number of transactions also increased threefold over that period to 55.8 million transactions from 18.6 million. High worker demand for such programs makes them a cost-effective way for businesses to retain and recruit employees, according to consultants and academics. High fees and frequent use of EWA programs can translate to an annual interest rate of more than 330%, according to experts, regulators, and consumer advocates.
- Consumer lending industry employment increased slightly while average wages for nonsupervisory employees increased significantly during the first nine months of 2024, according to the US Bureau of Labor Statistics. Consumer lending industry sales are forecast to grow at a 1.66% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
Industry Revenue
Consumer Lending
Industry Structure
Industry size & Structure
The average consumer lending company operates 5 storefronts with about 33 employees and has annual revenue of about $12.9 million.
- The consumer lending industry in the US consists of about 2,800 firms with 14,300 locations, about 93,000 employees, generating about $36 billion in annual revenue.
- About 12 million American adults use payday loans annually. On average, a borrower takes out eight loans of $375 each per year and spends $520 on interest.
- About three-fourths of consumers obtain payday loans exclusively through storefront locations, while just over 15% use online lenders exclusively.
- The industry is highly concentrated, with the 20 largest firms representing 75% of industry revenue.
- Many large companies also operate pawn shops.
- They may also operate check cashing and other personal financial services in states where regulations make payday lending unattractive.
- Major companies include Ace Cash Express, Advance America, Cash America, Check N Go, Money Mart and QC Holdings.
Industry Forecast
Industry Forecast
Consumer Lending Industry Growth
Source: Vertical IQ and Inforum
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