2022-AFS-Trends-Report(2)

Trends report
2022 Alternative Financial Services

Lending Trends
Insights into the industry and its consumers
Introduction
Experian’s Clarity Services holds the largest New to the report this year
repository of expanded-FCRA data, providing deeper
• Customer journey mapping for loan activity and
insights into millions of consumers that traditional
credit score changes
data alone can’t provide. Each year, we study this
ever-changing industry and compile the findings into a • Aggregation of online and in-store loans for all
robust report lenders can’t find anywhere else — your segments to provide a more complete and holistic
Alternative Financial Services Lending Trends Report! view of performance
The data in this report offers insights into an array • Insights into the rent-to-own market
of different consumer trends and behavior, including • Direct mail acquisition channel highlights
market size, acquisition channels, demographics, loan
performance, score changes, generational data and • Enhanced demographics section that analyzes:
so much more! This year, we’ve included important
– Differences between AFS consumers and
prospecting trends, enhanced demographic statistics
new-to-AFS consumers
and customer journey mapping designed to provide
even deeper insights than ever before. – Differences between consumers who’ve had a
delinquency and those who haven’t
We analyzed the trends and financial behavior of alternative financial services (AFS)
consumers from Clarity’s credit database. The study extends from 2017–2021 and is based on
a sample of ~800 million consumer loan applications and nearly 35 million loans.
Alternative financial services
Alternative financial services (AFS) lenders While AFS loan performance data is furnished to Clarity, data
serve the credit needs of predominantly non- on traditional loans for many of these same consumers is
prime consumers, originating various loan furnished to Experian’s national credit database.
types including small dollar loans (installment,
single pay, lines of credit, auto title) and rent AFS lenders include state-licensed lenders, bank/fintech
to own. This AFS information is one example partnerships and tribal lenders. Lenders offer a diverse suite
of Experian's expanded-FCRA data assets that of loan products that are tailored to the needs of consumers
can be used by lenders to facilitate inclusion and are customizable to align with consumers' pay dates or
initiatives and enhance decision making across more traditional monthly pay cycles.
the consumer credit life cycle.
The consumer of AFS loans could be:
For the purposes of this report, we focused on • A young person without sufficient credit history to
three loan segments. properly qualify for a traditional loan
• An otherwise creditworthy consumer who encountered

Key AFS segments
a destabilizing financial event, like a job loss or
1. Installment unexpected medical issue
Loans that are structured to be repaid over
a period of time (months or years) in a series • A recent immigrant with little to no credit history
of payments. in the United States
2. Single pay • Someone who has been irresponsible with credit

Loans repaid in one lump sum, usually over a
• Someone who needs cash quickly and doesn’t have time
shorter time period (days or weeks).
to wait to be approved for traditional credit products
3. Rent to own*
An agreement where tangible property is leased
for regular payments with an opportunity to
purchase at the end of the agreement.
Experian’s Clarity credit database provides the most comprehensive view

of alternative financial services lending (small dollar lending and rent
to own).
* In this report, since we're including rent-to-own contracts as part of the AFS lending industry,
we refer to rent-to-own transactions as "loans."
Page 2 | 2022 Alternative Financial Services Lending Trends Report

2022 Trends
Executive summary
Below are some of the most valuable insights we’ve pulled from this data. At the
end of the report, we dive into key takeaways that will help you navigate the post-
pandemic business environment.
• The overall AFS lending industry was resilient and

rebounded back to pre-pandemic levels.
• Installment lending remained strong, while there

800
million
35
million
5
year
continued to be a decline in single pay. Rent to own has consumer loan funded study
applications loans sample
experienced significant growth.
• Installment loan performance has deteriorated since Q2

2021, and this was observed for both consumers
Better understand how your lending
previously seen and new-to-AFS consumers. operation compares with respect to
• There was significant increase in prescreen and
growth, portfolio performance, consumer
demographics and behaviors.
prequalifiaction activity as lenders continued to diversify
their acquisition channels.
2022 Alternative Financial Services Lending Trends Report | Page 3

Trends report
Alternative Financial Services Lending Trends
nded-FCRA
Year in review
2021
The past couple of years have been unprecedented to say the
least, with changes to our economy that no one could have
predicted. We have experienced sharp rises in both gas prices
and food prices across the United States. Employment rates
in February 2021 were 8.5 million less than in February 2020,
This year provided and millions of Americans are still being affected by job loss.
unprecedented While we hope the worst is behind us, we'll still see the
opportunities for effects of a global pandemic for many years to come. We’ve
the AFS industry worked hard to analyze the market trends and behavior of
to undergo a the consumers you serve and provide you with vital insights
metamorphosis. that will not only help you navigate a post-pandemic world but
build a strong portfolio in the process.
No one knows what the future holds for any industry, but our
findings in 2021 show that the AFS market has rebounded
from the effects of the 2020 pandemic. Continue reading to
dive into the market analysis you’ve been waiting for all year.
1 https://www.worldbank.org/en/news/feature/2021/12/20/year-2021-in review-the-inequality-pandemic
2 https://www.pewresearch.org/fact-tank/2021/04/14/u-s-labor-market-inches-back-from-the-covid-19-shock-but-recovery-is-far-from-complete/

Trends report
At-a-glance
Market trends | PAGE 6
Overall market trends that continue to be in force post-pandemic include robust demand for
installment loans and rent to own. There continues to be a rapid decline in the single-pay segment.
Prospecting | PAGE 12
AFS lenders continue to value the importance of having diversified acquisition channels, as evidenced
by growth in prescreen volumes and a heightened interest in prequalification. In Q4 2021, the number of
prescreen campaigns more than doubled compared to Q2 2019.
Consumer behavior | PAGE 14

About half of installment and single-pay loan borrowers who opened an AFS loan in 2019 didn't open
any AFS loan in 2020 or 2021. For the rent-to-own segment, two-thirds of these borrowers who opened
a loan in 2019 didn't open another in the following years. Interestingly, these consumers exhibit very
little crossover to other AFS segments — few opened a loan in a different AFS segment in 2021.
Loan characteristics | PAGE 17

Average loan amounts have rebounded higher across all loan types, reversing the decrease observed
during the pandemic.
Credit quality | PAGE 22

First payment default (FPD) rates and serious delinquency rates have increased for installment loans
while FPD rates for single pay have declined.
Consumer demographics | PAGE 32

Millennials had the highest participation in the AFS market. Rent-to-own users tend to be younger than
other AFS segments. Consumers that were new to the AFS market in 2021 were more likely to be from
a wider range of generations than consumers in the AFS market overall.

Trends report
Market trends
AFS lending volume
To quantify AFS lending volume over the past five years, both the number of loans
and the total funded dollars were measured. Figure 1 shows the AFS lending
volume in units (top chart) and dollar amount (bottom chart) over the last five
years for three AFS loan segments. Each loan type is indexed to its specific
volume during 2017.
The rent-to-own segment has been growing rapidly during these years, more
than 350% in loan count and 650% in total loan amount. The installment segment
has shown moderate growth during this time, rebounding in 2021 from declines
in 2020. Installment loan count was 56% higher in 2021 than in 2017, and total
loan amount was 60% higher. Meanwhile, the single-pay segment has been in
decline since 2017, including a 70% decline in originations and total amount since 2019.
Figure 1: AFS lending volume (indexed to 2017)
Installment TotalRent-to-own
number of loans
Single Pay
700
600 We observed growth in rent to
amount
500
own and installment loans.
counts
400
Loanloan
300
4%
AFS
200 2%
Single pay Other
100
0
2017 2018 2019 2020 2021
27%
Rent to own
Installment Total loan volume in dollars
Rent-to-own Single Pay
Distribution of
700
2021 AFS loan
600 volume in dollars
AFS loan amount
Loan amounts
500
400 67%
300 Installment
200
100
0
2017 2018 2019 2020 2021
Installment Rent to own Single Pay

Trends report
The upper part of Figure 2 tracks the yearly trend in

the number of consumers who originated AFS loans by There was a rebound in the AFS
segment. These trends closely follow the ones seen in market as the country passed
origination volume (Figure 1). One difference is the number
peak COVID-19. This is visible
of consumers originating an AFS installment loan was
higher in 2019 than in the following years.
through the resumption of growth
of the rent-to-own and installment
The lower part of Figure 2 shows a departure from the segments in loan volume and
previously noted trends for consumers whose AFS activity amounts.
began in the noted year (new to AFS). Each AFS industry
exhibits a decline in the number of new-to-AFS consumers
since 2019. The installment segment attracted less than half
the number of new-to-AFS consumers in 2021 as it did in 2017.
Figure 2: AFS consumer trends (indexed to 2017)

Installment Rent-to-own Single Pay
Consumers
400
UInique consumers
300
Consumers
200
100
0
2017 2018 2019 2020 2021
Installment New-to-AFS
Rent-to-ownconsumers
Single Pay
400
UInique consumers
300
Consumers
200
100
0
2017 2018 2019 2020 2021
Installment Rent to own Single Pay

Trends report
Traditional loan accommodations

Over the past two years, some consumers experienced The loan types that were immediately impacted were auto
a financial impact as a result of economic changes and loans and retail lending. The percentage of AFS consumers
policies related to the COVID-19 pandemic. To gain a with any traditional loan payment accommodation declined
comprehensive insight into consumer behavior, loan from a high of 17% in June 2020 to less than 9% in
accommodations on traditional loans were tracked in 2021. December 2021. The auto industry exhibits increased levels
This year, we include deferment, forbearance and natural of accommodation compared to before the pandemic began.
disaster accommodations. However, only 1% of auto loans are in a deferment status.
Figure 3 shows the percentage of AFS consumers that Lenders may also report accommodations on AFS loans.
had any traditional loans with payment accommodations. No more than 0.25% of open AFS loans were under payment
The gray bar for each quarter indicates the percentage accommodation for most of 2021. By the end of 2021, that
of all loans. The subsequent bars for each quarter show percentage had fallen to nearly 0%.
the percentages for specific industries: auto, bankcard,
personal installment, revolving retail and student loans.
Loan accommodations
Figure 3: Percent of AFS consumers with impacted traditional loans are back to pre-
pandemic levels. This
20%
makes delinquency data
more reliable, which in
Percent of consumers with impacted loans
turn increases precision

15% 20% 20%
20%
in credit scores.
10%
15% 15%
15%
5%
10% 10%
10%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2020 2021
5% 5%5%
All Auto Bankcard Personal installment Revolving retail Student
0% 0%0%
Q1 Q2 Q3 Q4 Q1 Q2 Q1Q1
Q3 Q2Q2
Q4 Q3Q3
2020 20212020
2021
2020
2020
All Auto Bankcard Personal installment All All

Revolving retail AutoAuto
Student Bankca
Bankcard

Trends report
Location Figure 4: Relative loan volume by state 2017-2021

100%
Borrower location was examined for loans that were TX
3 2 2 2
funded from 2017 to 2021. Figure 4 shows that Texas has 90%
1
CA
surpassed California as the state with the most AFS loans 80%
originated in 2021. A likely contributor to California's slip FL
to second was the Fair Access to Credit Act which became 70% 1 1
1 1 OH
2
effective January 1, 2020. Other states that moved up in the 60% MI
relative rankings for 2021 were Georgia, Missouri 4
50% GA
and Arizona. 4
3 3
40%
3 MO
4 7
Figure 5 illustrates the percentage change in the number 2 3
6
4
AZ
30% 5
of borrowers who opened a loan with an alternative finance 4
5
6 8 IL
lender from 2020 to 2021. The overall pattern is a general 20% 7
10
9
6
7
increase in the counts of AFS consumers with a few states
8
11 7 AL
10 12
10% 6 8
experiencing a decrease. Texas, Arizona and Nevada 8 11 8
9
5 5 5 4
surpassed 25% growth in AFS consumers, while a 17% 0%
10
decline in AFS consumers occurred in Illinois. 2017 2018 2019 2020 2021
Figure 5: Percentage change in unique borrowers from 2020 to 2021
WA
-4% ME
VT -1%
MT ND 8%
19% -9% NH 39%
OR MN
-2% 17% MA 17%
ID SD WI NY RI 25%
-3% 2% 0% 36%
WY MI
0% CT 13%
17%
PA NJ 17%
IA 11%
NE 9% OH DE 17%
NV 4% IL IN 26%
25% MD 30%
UT -17% 22% WV DC 11%
3% CO 10% VA
22% KS KY 16%
MO 26%
CA 18% 5%
-6% NC
TN 18%
AZ OK 21%
NM 5% SC
27% AR 11%
11% 34%
MS AL GA
32% -3% 17%
LA
TX -2%
34%
FL
21%
AK 0%–20% Decrease
-5%
0%–10% Growth
10%–20% Growth
20%–30% Growth
HI
-4% 30%–50% Growth

Trends report
Among the states with positive growth in the number of

new-to-AFS consumers were states with relatively high Figure 6 illustrates the percentage change
lending activity, such as Texas and Nevada. The growth in in the number of new-to-AFS borrowers
New York was attributable to rent to own. Two regions of
who opened a loan with an alternative
decline in the number of new-to-AFS consumers stand out.
States from Illinois to the Pacific Northwest experienced
finance lender from 2020 to 2021.
a 10% or more decline in new-to-AFS consumers with the
exception of Wyoming. Another region with declines in new-
to-AFS consumers occurred from Louisiana to Virginia with
the exception of Mississippi.
Figure 6: Percentage change in number of new-to-AFS consumers 2020-2021
WA VT
-11% -16% ME
-21%
MT ND
-19% -17%
OR MN NH 23%
-17% -27% MA 1%
ID SD WI NY
-13% RI 28%
-18% -22% 29%
WY MI
8% CT 14%
6%
PA NJ 4%
IA -6%
NE -17% OH DE 14%
NV -13% IL IN 5%
8% MD 16%
UT -22% 5% WV
CO DC 12%
-6% -17% VA
-1% KS KY -11%
MO 5%
CA 2% -13%
-3% NC
TN -10%
AZ OK -5%
NM -3% SC
0% AR -11%
0% -6%
MS AL GA
11% -12% -6%
LA
TX -13%
21%
FL
3%
AK
-5% 20%–30% Decrease
10%–20% Decrease
0%–10% Decrease
0%–10% Growth
10%–20% Growth
20%–30% Growth

Trends report
Figure 7 shows, for each state, the percentage of AFS loans

Nationwide, 57% of 2021-originated AFS originated in 2021 that were installment loans.
loans were installment.
• 82% of AFS loans in Wisconsin were installment loans, the
highest percentage in the United States.
• Other states that had a high concentration of installment

loans relative to other AFS products included Nevada,
Missouri, Ohio and South Carolina.
• Results for states with a small number of installment

loans, a small number of installment lenders, or too much
installment segment concentration on one lender have
been removed from the view.
Figure 7: Percentage of AFS loans - installment segment
WA
58%
VT
MT ND n/a ME
69% 51% 35%
OR MN
59% 33%
NH 47%
ID SD WI NY
82% n/a MA 49%
69% WY 69%
MI RI 48%
44% 42%
PA CT n/a
IA n/a
NE 59% OH NJ 74%
NV 63% IL IN 71%
62% 60% 60% DE 75%
UT WV
52% CO n/a VA MD 49%
59% KS KY 54% DC 38%
MO 46%
CA 25% 77%
36% NC
TN 48%
AZ OK 48%
NM 62% SC
54% AR 66%
60% 20%
MS AL GA
59% 41% 47%
LA
TX 44%
50%
FL
48%
0%–20%
20%–40%
40%–60%
60%–80%
80%–100%

Trends report
Prospecting
Figure 9 displays the quarterly count of prescreen mail
pieces resulting from direct mail campaigns indexed to
Q2 2019. Prescreen volume was at an all-time high in the
latter half of 2021, and in the last three quarters of 2021,
Prescreen and prequalification are two channels that are
the number of mailings exceeded the volume observed in
increasingly being used in the AFS marketplace. Prescreen
Q2 2019. Looking back in time, the number of prescreen
volume has been at an all-time high, with the number of
inquiries decreased in 2020 during which there were more
mailings in each of the last three quarters of 2021 exceeding
campaigns but lower mailed volume per campaign
the volume observed in Q2 2019.
Prescreen for direct mail marketing

Prescreening consumer lists for direct mail marketing has Both the number of prescreen campaigns and
been an increasingly popular way to source new customers campaign size have rebounded significantly
for AFS loan products. Figure 8 shows the number of direct since COVID-19.
mail campaigns processed each quarter indexed against
Q2 2019 (value = 100). The height of the blue bars shows the
relative change in the number of campaigns. For example,
Q4 2019 had 40% more campaigns than Q2 2019.
Prospecting 1-2
Figure 8: Growth in prescreen direct mail campaigns Figure 9: Growth in prescreen volume
250 150
235
226
200 125 130 128
188
175
174
165
100 100
105
150
140
129 123 126 75 79 81 78
100 100
50
48 50
41
50
25 24
0 0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021 2019 2020 2021
• In Q3 and Q4 2021, the number of prescreen campaigns more than doubled as compared to Q2 2019.
• Every quarter from Q2 2020 on had more prescreen campaigns than the same quarter in the prior year.

Trends report
Prequalification
AFS lenders increasingly used prescreen and
AFS lenders are turning to prequalification to connect
consumers with credit options.
prequalification for customer acquisition.
The use of prequalification grew strongly in 2021. The blue

line in Figure 10 traces the quarter-over-quarter growth
in prequalification volume. For example, prequalification
volume during Q1 2021 was 35% higher than the volume in
Q4 2020. The average quarter-over-quarter growth during
2021 was more than 50%.
P R E Q UA L I F I C AT I O N V O LU M E
+35%
2020–2021
Figure 10: 2021 Quarter over quarter

growth in prequalification
150%
Percent change
100%
50%
0%
Q1 Q2 Q3 Q4

Trends report
Consumer
behavior
An important aspect in understanding consumer behavior For example, more than half of these consumers didn't open
is to track how borrowers migrate in and out of the AFS an AFS loan in 2020. And even fewer opened a loan in 2021.
industry and from one AFS product to another.
For 46% of these borrowers, no further AFS loans were
Installment opened in either 2020 or 2021, indicating the AFS borrowing
needs for these consumers were met by their 2019 loan. Of
Figure 11 tracks AFS loan originations through 2021 for
the installment borrowers that opened another installment
consumers who opened an AFS Installment loan in 2019 and
loan in 2020, 46% opened another installment loan in 2021.
paid it off. The width of the flow lines indicates the relative
There was little migration to other AFS industries for this
proportion of the cohort that moved on to open a specific
cohort. In 2021, only 9% of the cohort opened an AFS loan
type of loan in the following year.
outside of the installment
Figure 11: AFS industry migration for 2019 installment borrowers
Installment
Installment
Installment
Installment
Rent−to−Own
Rent to own
Rent−to−Own
Rent to own
Single
Single Pay
pay
Single Pay
Single pay
Multiple
Multiple
Installment
Installment
Multiple
Multiple
Other
Other
Other
Other
No
NoLoan
loan
No
NoLoan
loan
2019 2020 2021

Trends report
Rent to own
A majority of the borrowers (68%) who paid off a rent-to-
LENDER INSIGHT
own loan that was originated in 2019 didn't open any AFS
loan in 2020 or 2021 (Figure 12). The next most common lmost half of installment and single-
A
path (12%) was for consumers to take an additional rent- pay consumers who opened a loan
to-own loan in 2020 but no AFS loan in 2021. Only 6% of the in previous years returned to the
cohort opened rent-to-own loans in all three years. marketplace within the next two years.
Retaining consumers for future lending
A particularly noteworthy finding is that these consumers opportunities can be part of both a
exhibit very little crossover to other AFS products. Only 4% short- and long-term lending strategy.
of them opened a loan in a different AFS segment in 2021.
Figure 12: AFS industry migration for 2019 rent-to-own borrowers
Installment
Installment Installment
Installment
Rent−to−Own
Rent to own Rent−to−Own
Rent to own
Single Pay
Single pay
Single Pay
Single pay
Multiple
Multiple Multiple
Multiple
Rent−to−Own
Rent to own
Other
Other Other
Other
No
No Loan
loan No Loan
No loan
2019 2020 2021

Trends report
Single pay
Finally, Figure 13 illustrates the AFS future credit usage LENDER INSIGHT
of consumers who opened a single-pay loan in 2019 and
paid it off. As with other AFS loan types, the most common Consumers who opened
scenario for this consumer cohort (51%) was no additional
a single-pay loan in 2019
AFS loans originated in either 2020 or 2021. Only 9% of the
were more likely to open
cohort proceeded to open single-pay loans in both
2020 and 2021.
other types of AFS loans
compared to consumers
These consumers were more likely to open other AFS loan who opened installment or
types than consumers who opened installment or rent-to- rent-to-own loans.
own loans in 2019. In fact, it was more likely for them to
open other AFS loan types in 2021 (13%) as to remain in
single pay (12%). Installment loans were the most popular
destination loan product with 6% of the cohort opening an
installment loan in 2021.
Figure 13: AFS industry migration of 2019 single-pay borrowers
Installment
Installment Installment
Installment
Rent−to−Own
Rent to own
Rent−to−Own
Rent to own
Single Pay
Single pay
Single Pay
Single pay
Multiple
Multiple
Single Pay
Single pay Multiple
Multiple
Other
Other
Other
Other
No
NoLoan
loan
NoNoLoan
loan
2019 2020 2021

Trends report
Loan characteristics
Installment loans Table 1: Average
installment loan amounts
The distribution of loan amounts, repayment terms and scheduled payments for installment
loans were analyzed in this section to show how they’ve changed over the last five years.
Average
Year
Loan amounts amount
Figure 14 shows the distribution of loan amounts over time. Each bar represents installment 2017 $1,226
loans that were funded in that particular year with each segment of the bar identifying the 2018 $1,081
percentage of loans that fell into the specific range of loan amounts.
2019 $1,252
In 2021, there was more than a $150 increase in average loan amount for the installment loan 2020 $1,087
market (Table 1). This is a reversal of the decrease in loan amounts observed in 2020. The
percentage of loans with loan amounts less than $1,000 decreased from 59% to 52% in 2021. 2021 $1,250
Figure 14: Installment loan amounts
100%
80%
Percentage of loans
60%
40%
20%
0%
2017 2018 2019 2020 2021
Up to $500 $500–$1000 $1,000–$1,500 $1,500–$2,000 $2,000–$2,500 $2,500+

Trends report
Length of repayment Table 2: Average months of repayment

Figure 15 shows the distribution of repayment terms over for installment loans
time for installment loans. Each bar represents installment
loans funded in that particular year. The colors within each bar Average
Year
length
represent the number of months of scheduled repayment for
the loan and reveal the relative frequency of each category. 2017 8.0
2018 8.4
In 2021, there was a 2 percentage point decrease in installment
loans with a term length of less than 3 months and a 2 2019 9.4
percentage point increase in installment loans with a term
2020 8.4
length of at least 10 months compared to 2020. Despite this, the
average length of repayment decreased to 8.1 months in 2021 2021 8.1
(Table 2). The highest average repayment term of 9.4 months
occurred in 2019.
Figure 15: Length of repayment — installment loans
100%
80%
Percentage of loans
60%
40%
20%
0%
2017 2018 2019 2020 2021
0 to 3 months 3 to 6 months 7 to 9 months 10 to 12 months >12 months

Trends report
Scheduled monthly payment amount Table 3: Average scheduled monthly

Figure 16 shows the distribution of scheduled monthly payment payment for installment loans
amount over time. Each bar represents AFS installment loans
that were funded in the specified year, and each segment of the Average
Year
bar identifies the percentage of loans that fell into the specific payment
range of payment amount. Since many AFS installment loans 2017 $394
don't cycle on a monthly basis, all have been converted to a
2018 $367
monthly equivalent.
2019 $377
The distribution of scheduled monthly payments changed some
2020 $452
from 2020 to 2021. The percentage of loans with payments
of less than $200 declined 6 percentage points, while AFS 2021 $460
installment loans with a scheduled monthly payment amount
between $200 and $500 made up 4 percentage points more of
the market. Overall, the average scheduled monthly payment
increased by $8 (Table 3).
Figure 16: Scheduled monthly payment amount —

installment loans
100%
80%
Percentage of loans
60%
40%
20%
0%
2017 2018 2019 2020 2021
$0–$99 $100–$199 $200–$299 $300–$399 $400–$499 $500+

Trends report
Table 4: Average loan amount for single pay

Single-pay loans
This section explores how single-pay loan amounts have
changed over the last five years. Figure 17 shows the Average
Year
distribution of loan amounts over time. Each bar represents the amount
loans funded in that year. There was a shift towards larger loan 2017 $390
amounts in 2021. The percentage of single-pay loans for $400
or more was 31% in 2020 and 38% in 2021. Given the increased 2018 $389
prevalence of larger loan amounts in 2021, the segment 2019 $359
average rose by $14.
2020 $352
2021 $366
Figure 17: Single-pay loan amount distribution
100%100%
80% 80%
Percentage of loans
Percentage of loans
60% 60%
40% 40%
20% 20%
0% 0%
2017 2017 2018 2018 2019 2019 2020 2020 2021 2021
Up to Up
$200
to $200 $200–$299
$200–$299 $300–$399
$300–$399 $400–$599
$400–$599 $600+$600+

Trends report
Table 5: Average rent-to-own amounts

Rent to own
Debuting in this year’s report, this section explores how rent-
to-own loan amounts have changed over the last five years. Average
Year
Figure 18 exhibits the distribution of loan amounts with each amount
bar representing rent-to-own loans funded in that year. Each 2017 $1,558
color of the bar identifies the percentage of loans that fell into
the specific range of loan amount. 2018 $1,751
2019 $1,839
In the past five years, there has been a rapid increase in the
percentage of rent-to-own loans that are $2,000 or more. 2020 $2,072
These loans made up 23% of the market in 2017 and 47% of the
2021 $2,507
market in 2021. Table 5 indicates that the average rent-to-own
loan is almost $1,000 higher in 2021 than it was in 2017.
Figure 18: Rent-to-own loan amounts
100%
80%
Percentage of loans
60%
40%
20%
0%
2017 2018 2019 2020 2021
Up to $500 $500–$999 $1,000–1,499 $1,500–$1,999 $2,000–$3,000
$3,000–$5,000 $5,000+

Trends report
Credit quality
Installment loan performance
Figure 19 shows cumulative default curves* for AFS installment loans constructed by origination quarter to account for seasonal
performance patterns. The gray line is the average for years 2017 to 2019, pink is 2020 and the dark-blue line is 2021. Cumulative
default rates within 12 months of loan origination have averaged 33% to 35% for each quarter of 2017–2019. Loans originated in
2020 had lower default rates in Q1 and Q2 but higher rates in the other quarters.
Figure 19: Installment loan default curves by origination quarter

Q2
60% 60%
Q1 Q2
50% 50%
Ever missed a payment rate
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
10 21 32 43 54 65 76 8 9 9
10 10
11 11
12 12 1 2 3 4 5 6 7 8 9 10 11 12
60% 60%
Q3 Q4
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
0
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12 0
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
Months after origination
2017–2019 2020 2021

*These cumulative default curves are technically cumulative
Page 22 | 2022 Alternative Financial Services Lending Trends Report "ever-missed-one-payment" curves.
Trends report
• Loans originated in Q1 2021 tracked closely to the • Loans originated in Q3 2021 experienced a 34% default
default rates observed from 2017 to 2019 over the first rate by the fourth month after origination outpacing the
eight months after origination but have shown increased rates observed in previous years.
defaults in the last three months.
• Loans originated in Q4 2021 also exhibit increased
• Loans originated in Q2 2021 defaulted at a higher default activity; 21% defaulted in the first two months.
rate than in prior years. By the seventh month after
origination, 40% of those loans have defaulted.
Figure 20: Installment loan default curves by origination quarter — new to AFS
Q2
60% 60%
Q1 Q2
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
0
1 1
2 2
3 3
4 4
5 5
6 6
7 87 98 9
10 10
11 11
12 12 01 12 23 34 45 56 67 78 89 9
10 10
11 11
12 12
60% 60%
Q3 Q4
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 1 2 3 4 5 6 7 8 9 10 11 12
0% 10 21 32 43 54 65 76 87 98 10 11 12
0 1 2 3 4 5 6 7 8 9 10 11 12 9 10 11 12
Months after origination
2017–2019 2020 2021

Trends report
Installment loan performance — • Loans originated in Q3 2021 for new-to-AFS consumers

outpaced the rate in previous years with a
new to AFS
20% increase by the fourth month since origination.
Figure 20 (previous page) shows cumulative default
curves for the installment loans opened by new-to- • Loans originated in Q4 2021 for new-to-AFS consumers
ASF consumers. Default rates within 12 months of loan had a higher default trajectory than in previous years.
origination for this population have typically averaged
Installment first-payment
Q2 default rates
from 33% to 35% from 2017 to 2019. There was a departure
60% 60%
from the historical performance in Q3 and Q4 2020 when Installment loan performance was also evaluated using
the first loans for new-to-AFS consumers defaulted first-payment default (FPD). Figure 21 shows FPD rates for
50% 50%
installment loans for each quarter of the year. The gray line
at over 40%.
is the average for years 2017 to 2019, magenta is 2020 and
40% the40%
dark-blue line is 2021.
• Loans originated in Q1 2021 for new-to-AFS
consumers have a default rate about 6 percentage points These rates will usually be close to the rate of default in the
30% 30%
higher than those originated in the same first month after origination seen in Figures 19 and 20. FPD
quarter from 2017 to 2019. rates over 2017 to 2019 were 11%–12% for all quarters. FPD
20% 20%
rates in 2020 were a bit higher at 13%–14%. The FPD pattern
• Loans originated in Q2 2021 for new-to-AFS
for 2021 changed from near 12% in Q1 to nearly 16% in Q3.
consumers
10% are defaulting at a dramatically higher rate 10%
than in prior years. By the seventh month after
origination,
0% 51% of those loans had missed one or 0%
10 21 32 43 54 65 76 8 9 9
10 10 12
11 11 12 1 2 3 4 5 6 7 8 9 10 11 12
more payments.
60% 60%
Figure 21: Trend in FPD — installment
50%16% 50%
40% 40%
14%
FPD rate
30% 30%
12%
20% 20%
10%10% 10%
0% 0%
0
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12 0
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
8%
Q1 Q2 Months after origination
Q3 Q4
2017–2019
2017–2019 2020 2020 2021 2021

Trends report
In addition to looking at the overall FPD trend in installment

loans, trends across the United States were also reviewed. Installment loan delinquencies for the
Figure 22 shows the change in FPD rate from 2019 to 2021,
lower score band increased at the
for the lower 48 states. The year 2020 was not used for
comparative purposes due to the impact of the pandemic. greatest rate. Compared to 2017–2019,
Purple hues indicate an increase in FPD rate while blue FPD rates for installment loans have
hues signify a decrease. increased from 12% to nearly 16%.
Several states exhibited a five percentage point or higher
increase in FPD rate, most notably the cluster of California,
Nevada and Oregon along with Illinois and Louisiana. On the
other hand, several states saw a relatively large decrease in
FPD rates. Missouri, Colorado, Wyoming had greater than a
five percentage point decrease.
Figure 22: Difference in installment FPD rates — 2021 compared to 2019
WA
0%
VT
MT ND n/a ME
2% 3% 6%
OR MN
5% -3%
NH 6%
ID SD WI NY
-4% 4% 1% n/a MA 8%
WY MI
-8% RI 3%
1%
PA CT n/a
IA 1%
NE 2% OH NJ 5%
NV 1% IL IN 2%
8% 6% 0% DE 3%
UT WV DC 3%
-3% CO n/a VA MD 3%
-6% KS KY -2%
MO 2%
CA -2% -7%
6% NC
TN 4%
AZ OK 1%
NM -3% SC
4% AR 2%
3% -5%
MS AL GA
3% 5% 3%
LA
TX 6%
1%
FL
0%
5%–10% Decrease
0%–5% Decrease
0%–5% Increase
5%–10% Increase

Trends report
Clear Credit Risk™ score

performance for installment loans
• The Clear Credit RiskTM (CCR) score continued to effectively Although FPD rates have traditionally been a primary
rank-order consumers based on their likelihood of first default metric for small dollar loans, longer term
payment default (Figure 23). delinquency metrics provide even greater insight into true
credit risk for installment loans.
• FPD rates increased for all CCR score bands from Q1
through the end of the year. For example, consumers in Figure 24 examines the percentage of loans 30 or more
the 541–560 CCR score band had a 13% FPD rate in Q4 days past due in the first 90 days (quarterly view
2021, up from 10% in Q1. 2020–2021). For example, the dark-gray line shows 7.8% of
consumers with a CCR score above 600 were reported as
• The FPD rate for consumers was near the lowest
being 30 or more days past due in the first 90 days in Q1
point during Q1 2021 for almost every CCR score band.
2020. This serious delinquency rate for these consumers
• The increase in FPD rate was especially large for decreased to 5.4% in Q1 2021.
consumers scoring 520 or less.
• Similar to FPD rates, these longer term delinquency rates
• Potential reasons FPD rates in the same were at or near their low in Q1 2021.
CCR score bands have increased include:
• Default rates increased for loans originated in Q2 and
– Seasonality Q3, with the greatest increases occurring within the
lower CCR score bands. The greatest increase was
– Increased debt levels due to proliferation of
exhibited by the consumers scoring 300–520, where
buy-now-pay-later loans
40% of Q3 2021 loans went delinquent.
– Increased debt payments due to the end of
pandemic-related accommodations
Delinquencies increased for AFS
– Inflation and macroeconomic factors
installment loans and decreased for
single-pay.

Trends report
Figure 23: Installment loan first payment default (FPD)

45%
40%
CCR score range
35%
300–520
30%
FPD rate
521–540
25% 541–560
20% 561–580
581–600
15%
601–850
10%
5%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2020 2021
Figure 24: Installment loan: ever 30 or more days past due in first 90 days
45%
40% CCR score range
35% 300–520
521–540
30%
rate
FPD rate
541–560
25% 561–580
Delinquency
20% 581–600
601–850
15%
10%
5%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2020 2021

Trends report
Single-pay loan performance

First payment default (FPD) is a commonly used metric for Figure 26 limits the consumer population to only those
evaluating single-pay loan performance. who were new to AFS in the year the loan was originated.
Although new-to-AFS consumers had higher rates of FPD in
Figure 25 shows that FPD rates for single-pay loans 2021 than previously seen consumers, the performance in
originated in 2021 generally remained lower than prior 2021 was similar to previous years.
years. The third and fourth quarter of 2021 had the lowest
FPD rates observed for those specific quarters.
Figure 25: FPD rate for single pay — all consumers
35% 35%
35% 35%
30% 30%
30% 30%
2017
FPD rate
FPD rate
25% 201825%
FPD rate
FPD rate
25% 25%
2019
20% 20%
20% 202020%
15% 15% 2021
15% 15%
10% 10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
10% 10%
Q1 Q2 Q3 Q4 Q1
Figure 26: FPD rate for single pay — new-to-AFS consumers
35%
35% 35%
30%
2017
30% 30%
2017
2018
FPD rate
25% 2018
FPD rate
FPD rate
25% 25%
2019
2019
20% 20%
20% 2020
2020
15% 15% 2021
15% 2021
10% 10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
10%
Q4 Q1 Q2 Q3 Q4

Trends report
Applicant credit profiles Figure 27: AFS market VantageScore® 4.0 bands by year
There have been distributional shifts in the traditional

credit classifications (as defined by VantageScore® 4.0) 11% 13%
of consumers that applied for AFS loans. A traditional 18% 19%
credit score view of applicant quality shows improvement
in creditworthiness as shown in Figure 27. Each bar
represents VantageScores calculated for consumers who 19%
applied for AFS loans in the specified years. End-of-year 21%
scores were used. Each bar is split into colors representing
the credit classification bands (magenta is prime, purple is 24% 25%
near prime, dark purple is subprime and dark blue is deep
subprime). In 2021, 44% of AFS applicants had a near-prime
or prime VantageScore.
Some potential reasons for the increased representation of

consumers in higher VantageScore bands include:
50% 49%
• AFS lenders have been utilizing alternative
acquisition channels to expand their target universes
47% 45%
• Multiple government stimulus programs enabled
consumers to make timely loan payments
• Accommodations on traditional loans may have masked

or deferred true delinquencies
Many AFS lenders assess the credit quality of consumer

applicants using the CCR score, a score specifically 19%
17%
developed for the AFS market. While there has been a slight 11% 12%
increase in average CCR score for AFS consumer applicants
from 2020 to 2021, this should not be interpreted as a slight
2018 2019 2020 2021
improvement in credit quality. As stated earlier, the CCR
score continued to effectively rank-order consumers based Prime (661–850) Subprime (500–600)
on likelihood of default. However, due to changing market
Near prime (601–660) Deep subprime (300–499)
and economic conditions, we have also observed that
default rates have increased within score bands over time.

Trends report
Applicant credit profiles Figure 28(a): AFS consumer

VantageScore® 4.0 band migration (detail)
This year, we tracked the traditional credit scores of AFS
consumers. We initially selected a random sample of 200,000
consumers who opened an AFS loan in 2018. The distribution of
their VantageScores is displayed on the left hand side of
Figure 28a. VantageScores® 4 were then tracked at the end
of each year from 2019 to 2021. The size of the VantageScore
bars indicate the relative proportion of consumers within each
VantageScore band for the given year.
For 2018 AFS loan recipients, about 23% moved up in credit

classification and 22% moved down by the end of 2019. However,
in each subsequent year, far more consumers had moved up
in credit classification than moved down (25% more in 2020,
10% more in 2021). As of 2018, 82% of these consumers had a
subprime or deep subprime VantageScore, while in 2021 only Vant
64% fell into these same categories.
Fifty-nine percent of consumers had a subprime score in

2018. The flow lines indicate how the consumers transitioned
VantageScore bands to the next year. Of the subprime consumers
in 2018, they migrated to the following VantageScore categories
in 2019.
For example
A consumer with yearly scores of 580 (2018), 610 (2019), 630 (2020)
and 700 (2021) would start in the subprime category in 2018, move
to near prime in 2019, stay in near prime in 2020, and finally move
to prime in 2021.
*
VantageScore 4.0 classification
Prime 661–850
Near prime 601–660
Subprime 500–600
Deep subprime 300–499
2018 2019 2020 2021
*For the purposes of this analysis, super-prime and prime have

2018 2019 2020 2021
been combined due to small volumes
Year
2018 2021
Trends report
Consumer Age and income

For this section, basic demographics, such as applicant age
demographics and stated income, are reported across AFS loan segments.
Applicant age
An overview of demographic trends reveals patterns
and insights into the ever-changing AFS market. Rent-to-own applicants tend to be about three years
Bolster your market intelligence and dive deeper into younger on average than applicants in other loan segments
these 2021 AFS consumer demographic trends. (Figure 29).
Figure 29: Age profile of AFS applicants
81
80 79
73
Age in years
75th percentile
40 Median
25th percentile
20
18 18 18
Rent to own Installment Single pay

Trends report
In 2021, there were generational differences in AFS applicants compared

to consumers in Experian’s national credit database. Eighty-three percent DEFINING GENER ATIONS
of AFS applicants were Gen X or younger, while these groups only made up Birth year
57% of consumers overall (Figure 30). Consumers who were new to the AFS Gen Z 1996–2017
market in 2021 were more likely to be from a wider range of generations Millennial 1982–1995
than consumers in the AFS market overall. Gen Z has a 3 percentage points Gen X 1967–1981
higher representation among new-to-AFS consumers, but the boomer Boomer 1947–1966
and silent generations combined also have a 3 percentage point higher Silent 1900–1946
representation for new-to-AFS consumers.
Figure 30: Distribution of generation by market in 2021
all afs
All consumers AFS consumers New-to-AFS
newconsumers
1% 2%
10% 15% 14% 16% 17% 18%
24%
29%
30%
38% 35% 27%
23%
Silent Boomer Gen X Millennial Gen Z

Trends report
Generation
This year, we examined what proportion of the consumers in 5%
each generation who applied for an AFS loan in 2021 12%
(Figure 31). Millennials had the highest participation in the
15%
AFS market at 15%, while Gen X and Gen Z appear at 13%
and 12% rates, respectively. 13%
Figure 31: Percent in AFS Market
Income
Figure 32 compares the distribution of annual income* for AFS loan
Over 50% of all AFS applicants
applicants during 2021. have a stated income of
$50K or less.
• Incomes in the $30,000–$40,000 range were the most
common across all AFS loan types.
Table 6: Average stated incomes
• Applicants for rent-to-own loans had the highest average
annual reported income of over $46,000 (Table 6).
Industry Income
• About 10% of rent-to-own applicants reported a net Installment $44,700
annual income of $80,000 or more.
Rent to own $46,200
• Applicants for single-pay loans had the lowest average income
Single pay $42,600
of about $42,500.
*stated income from loan applications

Figure 32: Reported net annual income distribution by AFS segment
30%
of population
25%
30%
Percentage of population
25%
20%
20%
15%
Percentage
15%
10%
10%
5%5%
0%
0% < $20K $20–$30K $30–$40 $40–$50K $50–$60K $60–$70K $70–$80K $80–$90K > $90K
< $20K $20–$30K $30–$40 $40–$50K $50–$60K $60–$70K $70–$80K $80–$90K > $90K
Income group
Installment Income group

Rent to own Single pay

Trends report
Additional demographics Table 7: Comparison of new-to-AFS consumers

of AFS applicants
Table 7 compares consumers previously Previously New to AFS
Demographic
seen in AFS in 2021
seen in the AFS market to those who were
new in 2021. By the end of 2021 new-to-AFS Single-pay inquiry 29% 13%
consumers were much less likely to have: Any delinquency on a
91% 75%
traditional loan
• A single-pay inquiry Traditional inquiry in
64% 52%
the past 12 months
• A delinquency of 30 days or more past due Traditional installment
on a traditional loan 88% 79%
loan
A traditional inquiry in the past 12 months on In generation Z 12% 17%

the other hand, new-to-AFS consumers had: Average bankcard
$4,300 $5,900
balance
• Higher VantageScores Average VantageScore
576 619
4.0
• Larger bankcard balances
• Greater Gen Z representation
Table 8: Distribution of generation by market in 2021

For 2021 AFS applicants, Table 8 shows the
generation with the highest likelihood of having
a traditional loan by industry. For example, 84% Generation most
% with Average
likely to have Generation
of boomers had a bankcard loan, 87% of Gen X loan balance
had a traditional...
had an installment loan and 34% of millennials
Auto loan Gen X 73% $25,000
had a student loan.
Bankcard loan Boomer 84% $6,500
Installment loan Gen X 87% $39,000

34% of millennials in the AFS Mortgage loan Boomer 30% $170,000
market had student loan debt with
Retail loan Boomer 69% $1,800
an average balance of $34,000.
Student loan Millennial 34% $34,000

Trends report
Other notable insights for 2021 AFS applicants by generation include:
• 46% of Gen Z was new to AFS.

Birth Year
• 89% of millennials have a 30 or more days-past-due delinquency on a traditional loan.
• The average traditional loan balance for Gen X was over $80,000.
• At 614, boomers were the only generation with an average VantageScore 4.0 over 600.
Table 9 provides a comparison of 2021 AFS applicants based on the presence of any 30 or
more days-past-due delinquency on their traditional loans.
Table 9: Comparison of AFS consumers by presence of

traditional loan delinquency
Demographic No delinquency Any delinquency
New to AFS 61% 32%
Average bankcard balance $8,012 $4,202
Traditional mortgage loan 25% 17%
Open traditional loan 95% 83%
Single-pay inquiry 11% 25%
The consumers with no traditional loan delinquency:
• Are twice as likely to be new to AFS.
• Have $3,800 higher bankcard balances.
• Had an open traditional loan 12% more often.
Consumers with a delinquency on their traditional credit report are more than twice as likely
to have a single-pay inquiry.

Better understand a changing world with Experian's Clarity data
Following is a summary of key insights resulting from our analysis of a study sample with nearly 800 million
consumer loan applications and nearly 35 million loans from Clarity’s credit database.
Key takeaways
Loan characteristics have changed
• Installment loan amounts and monthly equivalent
loan payments have continued to increase.
Optimism and growth returns
• Rent-to-own loan amounts grew significantly.
• The AFS market rebounded in 2021 as evidenced
by the growth in installment loans. Consumer performance has deteriorated
• First payment default and serious delinquency
• Rent to own became a high-growth segment.
rates have increased for AFS installment loans
• Loan accommodations were at their lowest since since Q2 2021.
the beginning of 2020.
• Consumers in the lowest scoring bands had the
Customer acquisition channel diversification greatest increase in installment loan default rates.
• Prescreen volume was at a record high in 2021, a
• Single-pay loans continued to default at
result of both more and larger campaigns.
lower rates.
• Prequalification volume increased quarter over
• New-to-AFS consumers performed worse than
quarter during 2021.
those consumers previously seen in the AFS
• Applicant credit profiles have been impacted by lending ecosystem.
shifts in lenders’ acquisition channels.
The AFS consumer population shifted toward a
Behavior and migration younger demographic
• Consumers that open AFS loans and pay them off • The majority of AFS applicants were Gen X
satisfactorily tend to either open the same type of or younger.
AFS loan or no follow-up AFS loan.
• Rent-to-own applicants tended to be younger than
• Consumers who opened AFS loans migrated from applicants in other AFS loan segments.
“deep subprime” to “subprime” more frequently
than those without AFS loan activity.
If you have any questions or comments on this report,

please contact claritymarketing@experian.com.
In closing
We're pleased to report that there continued to be very robust demand for AFS loans
and that AFS lenders were able to serve the credit needs of so many consumers. The
only unfavorable trend observed was an escalation of delinquency and default rates for
AFS installment loans. Given the current economic environment, one in which everyday
expenses are rising even more quickly than wages, it will be interesting to see how AFS
consumers continue to behave. We encourage our lender partners to continue to utilize
Clarity’s products to their fullest to facilitate their inclusion initiatives and enhance their
decision-making throughout the consumer life cycle.
Each year we review and enhance the report to provide you with analysis, trends and
insights that are intended to help you better understand how your specific lending business
compares to the overall industry. We encourage you to provide us with feedback so that we
can continue to improve the report and provide you with the most valuable information
and insights.
About Experian's Clarity Services

Clarity Services is Experian’s real-time credit bureau that's focused on the alternative
financial services lending industry.
Experian © 2022 Experian Information Solutions, Inc. • All rights reserved

475 Anton Blvd. Experian and the Experian trademarks used herein are trademarks or registered trademarks of
Costa Mesa, CA 92626 Experian. Other product or company names mentioned herein are the property of their respective
owners.
www.clarityservices.com
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Trends report

2022 Alternative Financial Services

• An otherwise creditworthy consumer who encountered

2. Single pay • Someone who has been irresponsible with credit

Experian’s Clarity credit database provides the most comprehensive view

Page 2 | 2022 Alternative Financial Services Lending Trends Report

• The overall AFS lending industry was resilient and

• Installment lending remained strong, while there

• Installment loan performance has deteriorated since Q2

2022 Alternative Financial Services Lending Trends Report | Page 3

Alternative Financial Services Lending Trends

Page 4 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

Consumer behavior | PAGE 14

Loan characteristics | PAGE 17

Credit quality | PAGE 22

Consumer demographics | PAGE 32

2022 Alternative Financial Services Lending Trends Report | Page 5

Alternative Financial Services Lending Trends

Figure 1: AFS lending volume (indexed to 2017)

Installment Rent to own Single Pay

Page 6 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

The upper part of Figure 2 tracks the yearly trend in

Figure 2: AFS consumer trends (indexed to 2017)

Installment Rent to own Single Pay

2022 Alternative Financial Services Lending Trends Report | Page 7

Alternative Financial Services Lending Trends

Traditional loan accommodations

turn increases precision

All Auto Bankcard Personal installment All All

Page 8 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

Location Figure 4: Relative loan volume by state 2017-2021

Figure 5: Percentage change in unique borrowers from 2020 to 2021

2022 Alternative Financial Services Lending Trends Report | Page 9

Alternative Financial Services Lending Trends

Among the states with positive growth in the number of

Figure 6: Percentage change in number of new-to-AFS consumers 2020-2021

Page 10 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

Figure 7 shows, for each state, the percentage of AFS loans

• Other states that had a high concentration of installment

• Results for states with a small number of installment

Figure 7: Percentage of AFS loans - installment segment

2022 Alternative Financial Services Lending Trends Report | Page 11

Alternative Financial Services Lending Trends

Prescreen for direct mail marketing

200 125 130 128

Page 12 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

The use of prequalification grew strongly in 2021. The blue

Figure 10: 2021 Quarter over quarter

2022 Alternative Financial Services Lending Trends Report | Page 13

Alternative Financial Services Lending Trends

Figure 11: AFS industry migration for 2019 installment borrowers

2019 2020 2021

Page 14 | 2022 Alternative Financial Services Lending Trends Report

Alternative Financial Services Lending Trends

Figure 12: AFS industry migration for 2019 rent-to-own borrowers

2019 2020 2021

2022 Alternative Financial Services Lending Trends Report | Page 15

Alternative Financial Services Lending Trends

Figure 13: AFS industry migration of 2019 single-pay borrowers