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The sale of OneMain, which Citigroup has been seeking to hive off since 2011, is a major step in the No. 3 U.S. bank's plan to sell unwanted assets and focus on wealthier clients.
Citigroup's shares were up nearly 1 percent at $54 in premarket trading on Tuesday.
OneMain, which had assets of $9.72 billion at the end of September, provides personal loans for meeting unexpected expenses such as medical bills or car repairs and for buying small-ticket items such as refrigerators.
The business is part of Citi Holdings, which Citigroup created during the financial crisis to park assets that it wanted to eventually divest or wind down.
Citigroup had reduced Citi Holdings' assets to $98 billion, or 5 percent of the bank's total assets, by the end of 2014, from a peak of more than $875 billion, or more than 30 percent of assets.
Citigroup will use a part of the proceeds from the sale of OneMain to retire certain funding that currently supports Citi Holdings, the bank said in a statement.
The bank said the sale, along with retirement of the related funding, is expected to add about $1 billion to earnings before income taxes.
OneMain had filed for an initial public offering in October, but an outright sale was always Citigroup's preferred choice. However, potential buyers had trouble raising funds and Citigroup was unwilling to sell at the prices offered at the time.
Springleaf, majority owned by Fortress Investment Group LLC
OneMain and Springleaf are the only sizable national participants in the U.S. consumer lending industry serving the large and growing population of non-prime customers.
The combined company will have $15 billion in assets and operate through nearly 2,000 branches across the country.
The transaction is expected to add to Springleaf's after-tax earnings in 2015, the company said in a statement.
Bank of America Merrill Lynch, Barclays, Credit Suisse and Goldman Sachs are Springleaf's financial advisers, while Skadden Arps Slate Meagher & Flom LLP is legal counsel.
Citi is OneMain's financial adviser and Davis Polk & Wardwell is its legal adviser.
(Reporting by Avik Das in Bangalore; Editing by Savio D'Souza)