Pagaya vs. OneMain: Which Consumer Credit Stock is a Smarter Bet?

By Nikita Kataruka | July 29, 2025, 9:28 AM

Pagaya Technologies Ltd. PGY and OneMain Holdings, Inc. OMF are both consumer finance companies focused on catering to the underserved credit market -- subprime and non-prime borrowers. While Pagaya uses artificial intelligence (AI)-powered machine learning to optimize credit underwriting and securitization, OneMain operates as a brick and mortar and digital lender serving non-prime borrowers.

Can PGY’s AI-powered growth momentum subdue OMF’s proven marketplace supremacy? While both face headwinds from shifting consumer spending patterns and market uncertainties, let’s 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.

This model proved effective from 2021 to 2023 amid rising rates and tighter markets. By relying on forward flow agreements and strategic ABS issuance, Pagaya maintained liquidity and minimized loan write-downs.

The Case for OneMain

Operating through 1,300 locations across 47 states, OneMain typically 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 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 that extends through December 2026 reflects management’s emphasis on repurchases.

PGY & OMF: Price Performance, Valuation & Other Comparisons

So far this year, shares of Pagaya have performed extremely well, given bullish investor sentiments. The stock has soared 234.7%, while OMF has gained 13.5%. Hence, in terms of investor sentiments, PGY has the edge.