LEAP Financial Suspends Lease Originations
June 08, 2012
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SAN DIEGO — Low loan default rates and high prices on
repossessions are factors in one vehicle leasing company's decision to suspend
LEAP Financial on Thursday announced it is suspending originations of leases due to capital constraints.
Company officials said attempts to source capital over the last few months did not result in completing a transaction in time to meet volume demand.
"LEAP is a unique business model that helps consumers keep their vehicles with affordable payments and allows lenders to earn more than they would by taking the vehicle to auction," said Tim Condon, chief executive officer of LEAP Financial.
"We have learned a lot over the last two years. LEAP provides a fair product for lenders and consumers with good returns for investors in an underserved segment.
"We have not grown our volumes as quickly as we originally targeted due to low auto loan default rates and high used-car prices for repossessed vehicles," Condon reported. "We still believe, however, that the consumer demand exists and that this will be an effective loss mitigation tool for lenders. Attracting capital with a unique model in a specific niche has been difficult."
The company operates in most U.S. states and is backed by Austin Ventures.
LEAP management remains convinced that thousands of consumers unnecessarily lose their cars to repossession, officials said.
"Hopefully, LEAP's innovations have added to the industry dialogue on how best to deal with auto loan modifications and repossessions," Condon added.
In a company release, LEAP offered thanks to its employees, investors, lending partners and recovery agents for their support.
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