(SOP) for In-House Financing

Standard Operating Procedure (SOP) for In-House Financing

Benitez Auto Group

I. Objective:

The objective of this SOP is to standardize the procedures for managing in-house financing, which includes credit checks, loan approval, setting interest rates, and determining repayment terms. This ensures responsible lending and consistency in our financial dealings.

II. Scope:

This SOP applies to all financial officers and related personnel involved in in-house financing at Benitez Auto Group.

III. Procedure:

1. Credit Checks:

Obtain the necessary permissions from the customer to run a credit check.
Use a reputable credit reporting agency to run the credit check.
Assess the customer’s credit score and history, noting any factors that might influence their ability to repay the loan.

2. Loan Approval:

Use the credit check results, along with information about the customer’s income and current debts, to assess their ability to repay the loan.
Make the decision on loan approval based on this assessment, the dealership’s lending policies, and any legal requirements.

3. Setting Interest Rates:

Determine the interest rate based on the customer’s credit score, the loan amount, the repayment period, and the dealership’s policies.
Ensure the rate is competitive yet sustainable for the dealership.
Clearly communicate the rate and its implications to the customer.

4. Determining Repayment Terms:

Set the repayment terms based on the customer’s financial situation and the dealership’s policies.
Ensure the terms are fair and that the customer understands them.
Complete the necessary paperwork to formalize the repayment terms.

IV. Performance Monitoring:

This SOP’s adherence should be regularly monitored and reviewed. Loan default rates should be analyzed for continuous process improvement.

V. Document Control:

This SOP should be reviewed annually or as needed to ensure its relevance and effectiveness. Any changes must be communicated to all relevant staff.

VI. Approval:

This SOP is approved by the management of Benitez Auto Group.

Jonathan Benitez | 07/2023

By adhering to this SOP, we ensure responsible, fair, and consistent lending practices in our in-house financing operations. This is crucial to maintain customer trust and the financial sustainability of the dealership.