Why is it important to calculate affordability?
When applying for loans, many customers don’t consider how lenders judge affordability. Our quick and easy loan affordability calculator looks at many of the same questions that lenders should.
This means you can see in advance how much you may be able to borrow. It also helps you work out what you can afford to pay back.
As a well-established, reputable business we care about the wellbeing of our customers. Before taking out a loan it is important to make sure that the repayments are realistic. Your loan repayments should be fair and affordable.
Taking out a loan with unaffordable repayments can get you into serious financial difficulties.
About our loan affordability calculator
Our loan affordability calculator works out how much you can afford to borrow. We have designed our calculator for customers with previous credit issues. These issues can include missed payments, county court judgments or defaults.
The questions in our calculator are the same as those used by our trusted panel of short-term lenders. This means you can apply for a short-term loan that lenders are likely to agree is affordable and fair. No nasty surprises.
Our calculator takes into account your income and outgoings. Your earnings are the money you have coming in, such as your wages. Your outgoings include regular payments such as rent/mortgage, council tax and other bills. Our calculator then works out how much you can afford to repay each month.
Calculating your disposable income
Your disposable income is the money left each month after paying your regular bills. This is the most important factor in borrowing money. Especially so when using short-term loans. Disposable income is also a useful tool when budgeting and managing your finances.
Borrowing more than your disposable income can get you into serious repayment trouble. By using our calculator, you can avoid this situation.
When using our loan affordability calculator, please be as accurate as possible. List your total income, including your wages and any benefits you are receiving. Check your payslips or bank statements to get accurate figures. You should also include any extra income such as rent from lodgers or other financial help. When calculating your income, you should ignore one-off or irregular income.
Make sure your disposable income is sufficient to make your monthly payday loan repayments.
How to fill in the details
Use accurate figures for your outgoings, checking your bank statements for the average amounts. If you have any costs that you pay for on an annual basis, you should divide the total by 12. Likewise, you should divide any quarterly payments by 4. When calculating your outgoings, you should include:
- Council tax
- Utility bills such as gas, electric, water, council tax and phone bills
- Transport costs such as car tax, car insurance, bus/train tickets
- Credit repayments such as loan payments, credit card bills etc.
- Other expenses including clothing, beauty, entertainment, child care contributions etc. These can often be tricky to define. Check back through several months’ bank statements as this can be an easy way to see what you actually spend.
If your outgoings total more than your income, then borrowing money may not be a wise decision. This is especially true of short-term loans, which tend to have higher interest rates. Borrowing money when in this situation can land you in severe difficulties.