Non-prime lending: One size doesn’t fit all

Economic conditions are squeezing subprime borrowers, who are online non-prime lenders’ core customer base. At the same time, many of these lenders have little experience with near-prime borrowers—who many lenders view as their best hope for growth. Should the lenders focus on strengthening their core market or expanding it?

Maintaining emphasis on subprime customers as rising interest rates and inflation erode their borrowing power appears to be a losing strategy. The new KPMG Nonprime Borrower Survey, however, suggests that moving even slightly up-market to financially stronger borrowers presents major challenges for lenders that don’t fully understand what these borrowers want.