SAN DIEGO — LEAP Financial announced it will suspend originations of leases due to capital constraints. Officials with LEAP, which buys severely delinquent or repossessed vehicles from lenders and leases them to consumers, said the company has been attempting to source capital for the last few months, but has been unable to complete 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, CEO 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.”
Condon said the company has been unable to grow its volume as quickly as was originally targeted due to low auto loan default rates and high used-car prices for repossessed vehicles.
“We still believe that the consumer demand exists and that this will be an effective loss mitigation tool for lenders,” Condon added. "Hopefully, LEAP's innovations have added to the industry dialogue on how best to deal with auto loan modifications and repossessions."