How does a loan affordability calculator work?
When using a loan affordability calculator, you’ll enter your monthly income, followed by the cost of your essential outgoings, before being shown your result.
The CashLady loan affordability calculator is free to use and shouldn’t take more than five minutes to fill in.
What does ‘monthly income’ include?
Your monthly income could include:
- Wages from either part-time or full-time work or a self-employed role.
- Pension payments.
- Any benefits you receive.*
When entering your monthly income into the loan affordability calculator, be sure to include the figure after any deductions, such as tax and National Insurance. This figure is called your ‘net’ pay.
*Please note that some lenders will not consider applications from people on benefits, while others may consider certain types of benefits as a source of income. You can find out more in our guide to loans for people on benefits.
What are essential outgoings?
Essential monthly outgoings include (but are not limited to):
- Utilities and bills, such as water, gas, and electricity.
- Council Tax.
- Your rent or mortgage payments.
- Transport: for example, commuting costs.
- Groceries.
- Any existing credit commitments, such as a credit card account.
- Any other necessary monthly costs. This could include things like prescriptions, pet care, and insurance.
When looking at your disposable income, it’s also worth considering any other expenses that could crop up, such as dentist or optician appointments; birthdays; and Christmas or other holidays you celebrate.
What’s disposable income, and what has it got to do with loans?
Your monthly income – your essential monthly outgoings = your disposable income.
Your disposable income can give you an idea of how much money you typically have left over each month after paying for your necessities. This could help you work out how much money you could afford to borrow when searching for a loan.
Using a loan affordability calculator could help protect you from unaffordable borrowing.
Your loan repayments should not be more than your typical disposable income. Applying for a loan that you can’t afford could lead to serious money problems. A late or missed repayment will harm your credit score, and you could be charged a fee by your lender, which will increase the cost of borrowing.
Of course, sometimes our financial situation can change due to reasons out of our control, for example, if you’re made redundant while repaying a loan. In this situation, you should contact your lender as soon as you can – there may be things they can do to help.
The CashLady loan affordability calculator
When using our loan affordability calculator, please be as exact as possible.
Monthly Income:
Monthly Expenses:
I’d like to search for a loan; what’s next?
If the CashLady loan affordability calculator shows that you could afford to repay a loan, you can then decide whether you’d like to start your search.
CashLady is a credit broker, and you can use our free service to search for a short-term personal loan between £100 and £10,000 if you:
- Are over the age of 18;
- Are a UK resident;
- Have a UK bank account and a valid debit card; and
- Have a regular source of income paid into your bank account.
How long can I borrow money for?
CashLady makes it possible for you to search for a loan with a repayment term between 3 and 60 months, depending on the amount of money you apply to borrow.
How long you choose to repay your loan will directly affect the cost of your monthly repayments. Both shorter and longer repayment terms have advantages and disadvantages; you should take the time to go through your options to find the most suitable term for you.
Shorter terms:
- Less time to repay the money.
- Reduces the overall cost of the loan. The shorter the term, the less interest you’ll pay overall.
- Monthly repayments are higher.
Longer terms:
- More time to repay the money.
- Increases the overall cost of the loan. The longer the term, the more interest you’ll pay overall.
- Monthly repayments are lower.
Will I still need a credit check, even if the loan affordability calculator suggests that I could afford a loan?
Yes, you’ll still need to undergo a credit check, even if a loan affordability calculator has suggested that you could have enough disposable income to cover the cost of repayments.
When you search for a loan with CashLady, we’ll carry out a soft credit check with no impact on your credit score. If we’re able to match you with a loan and you go on to make a full application, your lender will carry out a creditworthiness assessment. This will involve either a hard search or Open Banking.
Please be aware that a hard search will be visible on your credit file for up to 12 months, and undergoing several hard searches in a short space of time will hurt your credit score.
What to do if you’re struggling with money
There are a number of charities and organisations in the UK that offer free, impartial money and debt management support, including StepChange, MoneyHelper, Citizens Advice, and National Debtline.