Q1 2026 Review | Consumer Lending

Hi all, Cole here,

We come to you today with our quarterly consumer lending review. Catch up on the latest trends in the consumer lending space:

• takeaways from earnings
  • originations (personal loan, BNPL, cash advance, high APR, second look)
  • credit data (BNPL, cash advance, selected leaders)
• and an increase in MPL new issue volume

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Missed last quarter’s report? Catch up on key trends with my Q4 Consumer Lending Review.

Consumer Loan Originations Roll On

Originations

In the first quarter, lenders continued to report strong growth in originations across lending products (BNPL, cash advances, higher-APR loans, personal loans). Consumer demand for credit remains strong, with aggregate household debt hitting a record high of $18.79Tn in Q1, per New York Fed data.

Personal Loan-Focused

Unsecured personal loan volume continues to surge, backed by a strong labor market and consistent demand for credit.

SoFi origination growth accelerated, up +68% YoY, driven by personal loans and supported by its Loan Platform Business (“LPB”) whose originations were up +90% YoY. As a reminder, SoFi’s LPB “refers pre-qualified borrowers to loan origination partners as well as originates loans on behalf of third parties.”

In addition, SoFi launched Big Business Banking in April, which seeks to give enterprise partners the ability to manage both fiat and crypto banking. Also in April, it relaunched SoFi Plus ($10/mo) with expanded benefits. And on the stablecoin front, CEO Anthony Noto said, “During Q1, we began minting SoFiUSD, the next step towards building compelling use cases for the coin. We also formed an important partnership with Mastercard to enable SoFiUSD settlement across their global payments network. This will create interoperability between digital assets and fiat currencies and eventually allow for the settlement of transactions 24 hours a day, 7 days a week versus just during business hours now.”

Upstart reported +61% YoY growth in originations, led by super prime (720+ credit score) originations, which were up +68% to $993Mn. Super prime originations represented 33% of all personal loan originations, up from 29% a year prior.

During the quarter, Upstart launched Cash Line, its first unsecured revolving credit product. Cash Line provides a revolving line of credit up to $5,000. For lines up to $500, there will be a $10 monthly membership fee and for draws beyond $500 there will be a 5-36% APR. This move comes amidst the rise of cash advance and EWA options. Players like Dave, MoneyLion and Brigit have successfully scaled cash advance originations. Chime entered the space mid-2024 with MyPay.

In March, Upstart joined the wave of fintechs pursuing charters, applying to the OCC and FDIC to establish an insured national bank. If approved, holding a charter and being able to take insured customer deposits would reduce Upstart’s operational, regulatory, and financial costs, the company says.

LendingClub posted +31% YoY origination growth, which outpaced guidance. Demand for its loans is strong, with CEO Scott Sanborn saying, “Despite the noise in the environment, we remain oversubscribed with an ability to sell more loans than we are generating. And average loan sales prices improved further in the quarter as it has in 8 of the last 9 quarters.”

In other news, LendingClub will rebrand to Happen Bank by summer 2026. And it launched home improvement financing through a partnership with Wisetack. Through the partnership, it will be able to reach over 40,000 contractors.

OneMain posted a more modest +3% YoY increase in originations, even as the company maintains tighter credit standards and higher pricing. Origination growth has been helped by its credit card business. OneMain continued to gain traction with its BrightWay credit cards, growing receivables +45% YoY to $983Mn.

OneMain said that it was making continued progress on its ILC application process. OneMain said the timing of the application was uncertain, but that it was optimistic because it believes it has a strong case for approval.

Oportun originations declined (11)% YoY, but were in-line with expectations as the lender has adopted a tighter credit posture. Despite this, Oportun’s secured personal loan product has continued to thrive, with receivables growing +31% YoY to $233Mn, to reach 9% of its owned portfolio balance. Oportun’s secured personal loans allow borrowers to secure their loans with their car titles, potentially allowing access to larger loans at lower rates than an unsecured loan. These loans have seen significantly better credit performance and generate 2x the revenue per loan compared to unsecured personal loans, primarily due to higher average loan sizes.

Oportun reported that it was advancing its risk-based pricing initiative to lend above 36% APR for select higher-risk segments. The fintech said it has signed an LOI with a new bank partner and is evaluating financing partners. Also of note, Oportun launched a payment protection offering that members can opt-into which provides protection against unforeseen events (involuntary employment, death, disability) by paying off all or part of the loan.

BNPL-Focused

BNPL growth remains red hot, with the category’s success driven by increased market penetration and increased usage by consumers.

Zip Co, a BNPL provider that operates in the U.S., Australia, and New Zealand, reported a +22% increase in volumes. For context, roughly three-quarters of its volumes come from the U.S. market, which grew +29% YoY. In February, Zip’s U.S. business rolled out a “Pay-in-2” installment solution to all customers, which has seen an average order value of $69.

Sezzle’s +37% YoY growth in GMV was also driven by greater usage of subscription products and increased consumer engagement. Quarterly purchase frequency rose to 7.1x, up from 6.1x a year prior.

Sezzle is exploring an ILC (industrial loan company) charter and expects to submit its application mid-2026. Sezzle has focused on expanding its product offerings, rolling out pay-in-5, expanding its long-term lending functionality, launching Agentic Commerce, launching a closed-end BNPL virtual card solution in Canada, and launching Sezzle Mobile.

Affirm’s YoY GMV (gross merchandise volume) growth of +35% benefited from a more engaged user, with 6.7 transactions per active consumer, up from 5.6 a year prior. At the same time, its average order value declined (7)% YoY to $255, in-line with strategy. GMV growth was led by Short-Term 0% APR which grew +55% YoY. Its interest-bearing product grew +33% and 0% APR Monthly product grew +30% YoY. The Affirm Card continues to scale, with 4.4Mn active cardholders at quarter end, up +130% YoY and card GMV of $2,130Mn, up +146% YoY.

In January, Affirm filed applications to form a Nevada industrial loan company and a corresponding application for FDIC deposit insurance. The charter would enable Affirm to raise its own deposits, lowering its cost of funding vs. current channels, such as securitizations.

Klarna reported +33% GMV growth YoY, helped by a +39% increase in U.S. GMV. Klarna’s Fair Financing (typically a 6-12 month term product which may charge interest) volumes soared, up +138% YoY to $4.1Bn. 21% of Klarna merchants now offer Fair Financing, up from 20% in Q4. Klarna said its Fair Financing offering has a transaction margin over 2x the overall portfolio.

Klarna Card continued to gain traction during its rollout, posting 5Mn active users, up from 4.2Mn in Q4.

Cash Advance-Focused

Consumers looking for a way to bridge the gap between paychecks have increasingly turned to earned wage access and short-term cash advance products.

Dave reported a +37% YoY increase in originations, driven both by the size of originations (+10% YoY to $212) and by growth in monthly transacting members (+18% YoY to 3.0Mn). At the same time, Dave has continued to grow its average revenue per ExtraCash advance, which grew +18% YoY to $13.5.

Dave is also exploring new product offerings. The cash advance player began testing Dave Flex, a Pay-in-4-credit card product, in early April. Dave Flex is currently in beta testing and its impact is not reflected in 2026 guidance. Dave plans to scale the product in 2027. Additionally, Dave rolled out Second Draw, a new feature which allows users to advance twice within a single pay period. Previously, if users had not utilized their entire ExtraCash limit, the remaining amount would not be accessible within the same pay period. Dave expects the new feature to provide users flexibility and to increase overall credit utilization.

Brigit has reported strong growth since being acquired by Upbound Group, with volumes growing +85% YoY (though 1Q25 figures represent February and March 2025 only due to the acquisition). Brigit grew its average revenue per user +12% YoY to $14.41 on higher expedited transfer fees, deeper engagement with marketplace offers, and a shift toward the Premium tier.

Brigit began to pilot its line of credit product in late 2025. The product offers up to $500 of liquidity on recent or upcoming purchases, twice the cap on its Instant Cash advances. Management aims for the product to bridge the gap between smaller ticket BNPL and larger ticket lease-to-own solutions. This move may enable the company to better compete with cash advance competitor products like Chime MyPay and Dave ExtraCash, which both offer up to $500.

Higher APR-Focused

Enova (offers unsecured installment and lines of credit with APRs 34-200+% depending on state and product type), reported +10% YoY growth in consumer originations.

Enova expects its acquisition of Grasshopper Bank (for $369Mn) to close in the second half of 2026.

Higher-APR lender OppFi saw originations decline (7)% YoY, due to lower net originations from refinance customers, “as the prior year period benefited from changes to our credit model that increased the maximum loan amount those customers could refinance, outweighing higher originations from new customers”.

In April, OppFi announced an agreement to acquire BNCCORP and subsidiary BNC National Bank for $130Mn. If the acquisition closes, OppFi will stand to benefit from BNC’s national banking charter (OCC).

Second Look-Focused

Pagaya, a second-look lender, reported a +9% increase in network volume, even as it maintained its tighter credit posture adopted in Q4. Excluding results from its Single-Family Residence business that it exited, network volumes advanced +23% YoY. Pagaya reported that it onboarded Flex Pay (a BNPL solution from Upgrade) and Sezzle. CEO Gal Krubiner noted that, “We welcomed Fitch into our capital market platform, marking the first time we have added a major rating agency alongside Kroll.”

Credit Data

BNPL

While there has been much media concern surrounding BNPL usage and potential losses, underlying credit data has not yet shown substantial credit deterioration.

Klarna’s provision for credit losses rose +1bp YoY to 0.55% of GMV. While Klarna’s Fair Financing product delinquencies were tracking marginally higher year-over-year, management noted that both are tracking favorably this year, with both 30+ and 60+ days past due rates declining quarter-over-quarter.

Affirm's delinquencies were slightly higher YoY, with its Monthly Installment Loan 30+ Day DQ Rate (Ex-Pay-in-4) for FY 3Q2026 at 2.8%, from 2.4% in FY 3Q2025.

Zip Co's net bad debts (annualized net write-offs / opening receivables) as a % of GMV rose +29bps YoY to 1.93% for FY 3Q2026.

Cash Advance

Brigit’s net advance loss rate rose +110bps YoY to 3.5%, as it tests new products and ramps up subscribers, but losses remained within expectations.

Dave’s 28-day delinquency rate declined (1)bp YoY to 1.69%, which marked the lowest Q1 rate in company history.

Enova, which lends at a higher APR and serves a clientele more prone to delinquency, reported an improvement in its consumer NCO ratio, down (368)bps YoY. To note, Enova saw minor elevated default metrics mid-2025 and tightened credit models for its consumer products.

LendingClub’s improvement in NCO ratio was driven by strong performance across five years of quarterly vintages.

SoFi’s NCO ratio improved but was affected by the sale of delinquent loans. Management disclosed that, accounting for the sale impact, it estimates the NCO rate for personal loans would be 4.4%.

OneMain Financial reported a +19bps YoY increase in its NCO ratio, but has maintained a conservative credit posture, which may help future results.

Oportun reported a +45bps increase in its NCO ratio. However, NCOs came in within Q1 guidance after Oportun tightened credit in Q3 by reducing loan sizes and focusing on returning members. 79% of originations came from returning members, up from 63% a year prior.

OppFi, which also lends at higher APRs and serves a clientele more prone to delinquency, reported an +850bps increase in its NCO ratio, as a result of elevated charge-offs offsetting higher recoveries of previously charged off loans.

MPL New Issue Volume Growth Accelerates

In the first quarter, new issue volume for the consumer unsecured MPL market grew +41.0% on a YoY basis and +33.1% on a QoQ basis. The +41.0% increase represented an acceleration in YoY growth from Q4 (+22.8%). The YoY increase in new issue volume was driven by an increase in the number of deals (16 vs. 14) and in average deal size, which was +23.3% higher YoY to $469Mn.

Demand for this paper remains strong, and spreads continue to tighten. Affirm was able to drive a (126)bp decline in its cost of funds, on solid ABS execution and the repricing across all funding channels. In the quarter, Affirm upsized its 2026-2 revolving ABS transaction to $750Mn from $500Mn. The deal was more than 2x oversubscribed following the upside. Credit spreads tightened slightly compared to its comparable September transaction “despite funding market volatility”.

Affirm CEO Max Levchin said, “We also priced our third consecutive revolving ABS transaction under a 5% blended yield in March, and our average annualized cost of funds reached the lowest level in three and a half years.”

Affirm COO Michael Linford added color, saying, “I think we've executed 3 deals so far this year, 2 revolving deals in the quarter, and then we just priced a static deal we haven't yet closed on. And the trend really across all 3 is incredible depth, lots of oversubscription in these deals and continued and sustained tightening of spreads and a key part of the reason why you see funding costs down on the order of 125 basis points year-on-year.”

Oportun reported that it had completed a $485Mn ABS transaction in February, with a 5.32% weighted average yield. This transaction marked its fourth consecutive issuance with a sub-6% funding cost and a AAA rating at the top of its capital stack.

Pagaya reported that it upsized its recent ABS transaction to $800Mn from $600Mn. Pagaya CFO Evangelos Perros added, “Firstly, we received our first AAA rating from Fitch on our personal loan resecuritization shelf. And secondly, we successfully executed our first auto securitization.”

And CEO Gal Krubiner included his view on the markets, with, “The consumer credit public market continued to demonstrate strength despite recent volatility. In fact, we are seeing an influx of new investors participating in this market. We also reached another important funding milestone. We welcomed Fitch into our capital market platform, marking the first time we have added a major rating agency alongside Kroll. This is meaningful because it provides enhanced stability to our capital market presence and reinforce confidence in our asset performance.”

In separate, but related funding news, Upstart CEO Paul Gu stated, “Year-to-date, we've expanded and deepened our forward flow relationships, securing over $4 billion in new committed capital. That includes about $2 billion in new commitments from Eltura, Centerbridge and Wafra, alongside renewals from Fortress and Blue Owl…Additionally, our recent securitizations totaling approximately $1 billion were multiple times oversubscribed with the most recent transaction upsized.”

Per the Finsight database, Affirm - $1,750Mn, Pagaya - $1,696Mn, SoFi - $919Mn, US Bank - $563Mn, Reach Financial - $550Mn, Oportun - $485Mn, Rocket Mortgage - $305Mn, Upstart - $292Mn, Purchasing Power - $225Mn, Avant - $200Mn, Ledn - $188Mn, Upgrade - $184Mn, and Americor - $149Mn, were among the most active players in the first quarter.

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