What is an affordability check?
Whether you are applying for finance for a new sofa, a mortgage or a car, there can often be a lot to take in. There are several steps that a lender must follow before they can accept your application.
As a responsible lender it is our duty to make sure that we aren’t lending money to you that you cannot afford, and that’s why we do affordability checks.
An affordability check looks at a lot of different things, including:
- Your credit score
- Your salary
- Any other loans you may currently be paying off.
It’s a simple maths equation really. We take the amount you have coming in each month and the amount you have going out each month and look to see if there is enough money left for the new loan, as well as for your general everyday expenses. When applying for finance with us, you will not be able to apply for a loan with us if you are not bringing home at least £1,000 per month. This is the figure that lands into your bank account after tax.
You might be thinking, that’s great but I just want to know how much I can afford and if you will lend to me? Well, most lenders now have an affordability calculator easily found on their website, which can be very handy, and can give you a rough idea of what you could get.
Before you use an affordability calculator you should know that they’ll never be able to promise that you will be approved for a loan, or even the amount you could get. Calculators do not look as deeply into your finances as a full affordability check does, and lenders cannot be certain of your loan amount or term before they do these checks.
Although affordability calculators are a great place for you to start, you will never know for certain if you can get the loan you require without applying. You will need to go through the necessary affordability checks, as well as other checks before anything can be guaranteed.
How does an affordability check work?
Unfortunately, with affordability there are many different rules that each individual lender will follow to make sure you can afford their loan. If you fit all the criteria straight away then you will instantly be accepted, but sometimes lenders need to know a little bit more. At this point they may well ask you to provide more information about yourself, just to make sure that they won’t be putting you in more debt if the loan was to be approved.
There is also no such thing as a loan without affordability checks. A responsible lender will always do an affordability check, however some lenders will do it in the background of your application and therefore you might not be aware it’s happening. You will only be aware of Moneybarn affordability checks when you are ‘approved in principle’, this is where we will ask you for more information to aid your application.
If you’re still wanting vehicle finance with us, then you can apply here.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
