LEAP Financial has stopped originating leases due to lack of capital, the company announced yesterday.
The San Diego, Calif.-based vehicle leasing company serves consumers who have difficulty obtaining credit and works with them to either keep their current vehicle or obtain another one. The company's product also enables customers who are unable to qualify for traditional financing to lease a vehicle.
Despite attempts to source capital over the past few months, the company has been unable to complete a transaction.
“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,” said LEAP Financial CEO Tim Condon in a statement. “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."
LEAP's management is convinced that there are thousands of consumers who unnecessarily lose their cars to repossession.
"Hopefully, LEAP's innovations have added to the industry dialogue on how best to deal with auto loan modifications and repossessions," Condon said.