Automotive News -- March 7, 2012 - 12:01 am ET
It may sound counterintuitive, but customers fresh from bankruptcy or whose cars are being repossessed can be highly desirable customers for lenders and dealers, say two companies that cater to what's politely known as the BK market, short for bankrupt.
That's because close to 40 percent of the customers who can be identified from publicly available U.S. Bankruptcy Court records buy a car within 30 days after their cases are discharged, according to OnlineBKmanager.com of Chandler, Ariz.
"Our focus is to work directly with franchised new-car dealers," said Robert Davies, company president, in a phone interview earlier this year.
The company mines court records to identify people who are approaching the point where they can buy a car again. Dealers and lenders can buy those leads and the company sends direct-mail pieces to the customers. OnlineBKmanager.com has about 800 dealers signed up and a growing number of lenders, Davies said.
For instance, the company announced in February that it had signed up with Prestige Financial Services, a subprime auto lender owned by Utah-based Larry H. Miller Group of Companies.
Tim Condon, CEO of Leap Financial, said in a recent interview that many of the customers who are in repossession or who go bankrupt have had a good credit history in the past.
"Probably half our portfolio are consumers who were prime customers prior to the recession and just hit a bad patch," he said.
Leap Financial buys cars from lenders that are in the process of repossessing them. The company leases them back to the same owners for a lower monthly payment. The lender gets more than it would if it auctioned off the car. The customer gets the car back -- with a GPS-based starter-interrupter that disables the car if the customer misses a payment.
Said Condon: "We get shockingly good results."
You can reach Jim Henry at autonews@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.View the original article here
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