Most people will need to borrow money at some stage in their lifetime. Before they borrow money, they must ensure that they will be able to keep up with the loan repayments.
Prospective borrowers must look out for three crucial factors when determining the affordability of their chosen credit deal:
Taking these factors into consideration, they must determine the amount of money they have coming into their household and the amount of money they spend. In doing so, they will help to ensure that they have sufficient disposable income to afford their loan repayments.
To determine the amount of money they can borrow, prospective borrowers may wish to consider using a loan repayment calculator. This tool will enable them to work out whether their chosen loan is affordable. A loan repayment calculator will take into account the amount of money they would like to borrow, the number of years over which they would like to repay the loan, and the APR figure provided by their chosen lender. It will then work out an approximate monthly loan repayment, helping them to decide whether they can afford the repayments on their chosen loan.
Borrowers must be able to keep up with their repayments throughout the entire term of their loan. If they fail to do so, they may incur charges and could even face legal action.