Who in the world will accept your poor credit? World Acceptance Corp. just might. The consumer finance company offers short-term and medium-term loans and credit insurance to individuals with limited access to other credit sources. Borrowers use the loans of $300 to $4,000 to meet temporary or unanticipated cash needs, such as car repairs and medical bills, filling a void left by banks and credit unions, which typically don't make loans of less than $5,000. Convenience comes at a price: World Acceptance often charges the maximum interest rates and related fees allowed by law. The fast-growing company has more than 1,100 offices in a dozen states in the US South and Midwest, as well as Mexico.
World Acceptance Corp's largest US markets are Texas, Georgia, Tennessee, and South Carolina. Since entering Mexico in 2005 the firm has grown to more than 100 offices there.
In addition to loans, World Acceptance also offers income tax preparation services, refund anticipation loans, and unemployment and credit-related insurance through third parties. Subsidiary ParaData Financial Systems markets data processing software and related services to other consumer finance companies. Via its World Class Buying Club, World Acceptance markets and finances home electronics and appliances to its customers in Texas, Georgia, Tennessee, New Mexico, and Missouri, where it is permitted by law.
World Acceptance's fiscal 2012 (ends March) sales climbed 10% vs. the prior year, while net income also increased 10% over the same period. The addition of 70 new offices in in 2012 vs. 2011 helped propel the revenue gain. Interest and fees on loans account for about 85% of the company's sales. Indeed, sales and profits at the loan maker have been increasing steadily for nearly a decade as the company grows its network of offices.
World Acceptance is following a path of organic growth. Indeed, the firm has opened more than 660 new office locations since 2003, and plans to open or acquire at least 50 more in the US in fiscal 2013. In Mexico it plans to add about 15 new offices in the coming year. The company plans to continue its expansion in both countries, including entering new markets as approvals and licenses are gained. It commenced operations in Wisconsin in 2010. World Acceptance also grows through acquisitions.
The company's physical growth has translated in more new customers and more loans and, in turn, higher revenues and income. It originated some $2.8 billion in loans in fiscal 2012 vs. $2.6 billion in the previous year. The economic downturn and weak recovery for its low-income customers has benefitted World Acceptance, as consumers seek short-term funding to make ends meet. It is a double-edged sword for World Acceptance, however, as higher unemployment often leads to more delinquencies.
A private investment limited partnership, Prescott Associates, owns about 22% of World Acceptance. Investment advisor Columbia Wanger Asset Management holds about 16%. – less