Cps

[DontJudgeME]

Anyone heard of or had any experience with Consumer Portfolio Services (CPS)?

[HHM]

Why do you ask? They are essentially a loan pooling company. They buy-up financed auto purchase contracts from dealers, pool them, and securitize them (meaning, the loan pool becomes a giant interest bearing bond, so-to-speak). The securitized pools are then sold to investors and then CPS likely takes a servicing fee on the back end to service the payments made by the borrowers.

[coma]

We had a loan bought by them a while ago. Never had any contact with them...just paid the payments and go the title at the end. They are not a direct lender

[DontJudgeME]

Why do you ask? They are essentially a loan pooling company. They buy-up financed auto purchase contracts from dealers, pool them, and securitize them (meaning, the loan pool becomes a giant interest bearing bond, so-to-speak). The securitized pools are then sold to investors and then CPS likely takes a servicing fee on the back end to service the payments made by the borrowers.

I asked because a co-worker filed bk 7 months a ago, and she recently financed a car with CPS her interest rate was: low 8%. Considering the severity of her credit and the fact that her bk hadn't been discharged.

If I understand you correctly, you are saying that CPS is not bank. If that is so I don't understand because she makes her payments to CPS.

Thanks

[SinkingFast]

I asked because a co-worker filed bk 7 months a ago, and she recently financed a car with CPS her interest rate was: low 8%. Considering the severity of her credit and the fact that her bk hadn't been discharged.



Thanks

Since you said her BK hadn't been discharged yet,........... Maybe your co-worker took out a 722 Redemption Loan.

That's a special loan allowed for in the BK Code. The Filer's attny has to affirm the loan will not cause undue financial hardship. And, the Trustee has to approve as well.

[HHM]

Well, you don't have to be a "bank" to loan money to people to purchase cars. CPS is one part loan servicer (kinda like a Mortgage service agency), a company set up to merely process the payments. I wasn't aware CPS made loans directly (I don't think they do because you need to licensed in the state).

Putting aside the fact that this loan happened while in BK...when you buy a car from a dealer and you have so-so credit, what happens behind the scenes is this...the dealership will sell you the car if they believe they have a plausible shot at getting you financed (dealers are just agents, they don't lend you money). Then the dealership takes all your paperwork and sends it to various banks and car finance companies to see if anyone will take the note (it's called, shopping the note around) and because the finance manager of the dealership will know the basic criteria of all the finance companies for accepting notes, so shopping around is usually not a problem. However, if the dealership was a too aggressive in selling the car (desperate to make the deal), you can get a yo-yo sale, whereby the finance manager has to call the customer back in and change the terms of the deal (i.e. usually higher interest, shorter term, or higher payment).

In any event, CPS is a company who would buy the note from the dealer, then CPS turns around and sells the note (along with a bunch of others) to investors, and then CPS processes the payments.