Standard Operating Procedure (SOP) for Risk Assessment – Benitez Auto Group

Standard Operating Procedure (SOP) for Risk Assessment

Benitez Auto Group

I. Purpose:

The purpose of this SOP is to set forth the standard procedures for conducting risk assessment on potential buyers. This process includes credit history checks, employment verification, and income assessment, all designed to ensure responsible and sustainable lending practices at Benitez Auto Group.

II. Scope:

This SOP applies to all finance officers and sales consultants at Benitez Auto Group involved in buyer risk assessment and credit approvals.

III. Procedure:

1. Initial Buyer Inquiry:

Explain to potential buyers the importance of credit assessment, employment verification, and income assessment to ensure understanding of our procedures.
Ensure all necessary permission to run these checks are obtained from the potential buyer.

2. Credit History Check:

Use a reputable credit reporting agency to run credit history checks on the potential buyer.
Analyze the buyer’s credit score and credit history, focusing on factors like payment history, outstanding debt, and any red flags such as defaults or bankruptcies.

3. Employment Verification:

Contact the potential buyer’s employer to verify their employment status and tenure.
Confirm the buyer’s position, salary, and stability of employment.

4. Income Assessment:

Request proof of income documentation such as pay stubs, bank statements, or tax returns.
Compare the buyer’s income against their disclosed monthly expenses and existing debt obligations to evaluate their ability to afford the proposed financing.

5. Risk Analysis:

Consolidate all collected information to determine the potential risk associated with the buyer.
If the risk level is acceptable, proceed with the financing process. If the risk is too high, respectfully communicate the decision to the potential buyer and suggest alternative solutions, if available.

IV. Performance Monitoring:

Performance and adherence to this SOP should be regularly reviewed and monitored. Customer feedback and default rates should be analyzed for continuous process improvement.

V. Document Management:

This SOP should be reviewed at least annually, or as necessary, to ensure it remains relevant and effective. Any amendments must be promptly communicated to all affected personnel.

VI. Approval:

This SOP has been approved by the management of Benitez Auto Group.

Jonathan Benitez | 7/5/2023

By adhering to this SOP, we maintain responsible lending practices that align with our commitment to both the success of our dealership and the financial wellbeing of our customers.