PGY vs. OMF: Which Consumer Credit Stock Is Better Placed for Growth?

Nikita Kataruka October 24, 2025

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Key Takeaways

PGY uses AI, ABS vehicles and forward flow deals to grow with minimal on-balance-sheet exposure.
OMF combines subprime lending with a physical footprint and expands products like auto loans and credit cards.
OMF rewards shareholders via rising dividends and a $1B buyback plan extended through December 2026.

Pagaya Technologies Ltd. (PGY - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) are key players in the consumer finance space, targeting the underserved credit segments, such as subprime and non-prime borrowers. However, their operating models and revenue structures differ markedly.

Pagaya operates as a technology-driven fintech platform, using artificial intelligence (AI)-powered machine learning algorithms to assess credit risk, optimize loan underwriting and facilitate asset securitization in partnership with banks and fintech lenders. In contrast, OneMain functions as a traditional non-prime lender, directly originating and servicing personal loans through a nationwide branch network and digital channels.

Strategically, while PGY positions itself as a B2B enabler leveraging AI to expand access to credit, OneMain maintains a direct-to-consumer lending model, combining risk-based pricing and customer relationships to drive profitability.

Let us see if Pagaya’s AI-powered growth momentum can subdue OMF’s proven marketplace supremacy. While both face headwinds from shifting consumer spending patterns and market uncertainties, let us decipher which stock is better placed for long-term growth.

The Case for Pagaya

With an adaptable business model and capital-efficient structure, Pagaya initially focused on personal loans. Over time, the company expanded into auto lending and point-of-sale financing, reducing exposure to any single loan type and improving resilience across economic cycles. To diversify its funding, PGY has built a network of more than 135 institutional partners and utilizes forward flow agreements — pre-arranged deals where investors commit to buying future loans. These agreements offer funding stability, especially during market disruptions.

A key differentiator is Pagaya’s proprietary tech and product suite. Its pre-screen solution allows lenders to present pre-approved offers to existing customers without formal applications, helping partners boost credit access and deepen relationships with minimal marketing spend.

Additionally, Pagaya operates with minimal on-balance-sheet exposure. Loans are typically acquired immediately by asset-backed securities (ABS) vehicles or via forward flow agreements, thanks to capital raised in advance. This approach limits credit and market risk, preserving flexibility during turbulent environments. By relying on forward flow agreements and strategic ABS issuance, Pagaya has maintained liquidity and minimized loan write-downs.

Notably, at the beginning of this month, PGY closed Revolving Pool Master (RPM) 2025-5, a $400-million ABS transaction, backed by auto loans originated through its lending partners. The deal marked Pagaya’s fifth auto ABS transaction in 2025, bringing its year-to-date auto ABS issuance to $1.7 billion, a record pace for the company.

Driven by strong network volume growth, improved monetization, better operating leverage and solid credit discipline, supported by an improvement in capital structure, PGY has recorded two consecutive quarters of positive GAAP net income this year, representing a dramatic turnaround from the substantial losses experienced in the previous years.

The Case for OneMain

Operating through 1,300 locations across 47 states, OneMain provides unsecured and secured personal installment loans, often used for debt consolidation, home improvements, medical expenses and other large personal needs. It also offers optional credit and non-credit insurance products, such as life, disability and involuntary unemployment insurance.

Revenue growth has been a major strength for OneMain. Its loan mix of Front Book and Back Book aims for revenue sustainability while maintaining an upside potential in a rapidly changing macroeconomic environment. OMF frequently securitizes portions of its loan book via OneMain Financial Issuance Trust to reduce funding costs and manage balance sheet exposure. Its 2024 acquisition of Foursight Capital LLC expanded its presence into the auto lending business.

As a subprime lender, OMF is more exposed to credit risk and macroeconomic cycles. However, the company employs rigorous underwriting and servicing, supported by centralized data analytics, and has a strong record of managing credit performance, even during downturns.

OMF focuses on sustainable shareholder returns through dividends and buybacks. Since initiating dividends in 2019, it has raised them seven times. A $1-billion buyback program launched in 2022, which extends through December 2026, reflects management’s emphasis on repurchases.

Thus, OMF’s efforts to grow credit cards and auto finance businesses, along with lower rates and a diversified product base, are expected to support top-line expansion.

PGY & OMF: Price Performance, Valuation & Other Comparisons

So far this year, shares of Pagaya have performed exceptionally well, given bullish investor sentiments. The stock has skyrocketed 217.8%, whereas OMF has gained 8.1%. Hence, in terms of investor sentiments, PGY has the edge.