What lenders check in an affordability assessment

An affordability assessment is the lender’s way of checking that the repayments won’t leave you short. It’s a legal requirement under the National Credit Act and its affordability regulations, and it protects you from being lent more than you can manage.

What lenders look at

Your income

Lenders look at your gross income and what you take home after tax and deductions. They must verify it, usually with your three most recent bank statements or payslips. If you’re self-employed or paid irregularly, they’ll look at a longer pattern of deposits.

Your existing debt repayments

Your credit report shows the accounts you already have and what you pay each month. Lenders add these to the new repayment to see the total you’d owe each month.

Your necessary living expenses

Lenders must take into account what you need to live on, including housing, transport, food, school fees and utilities. They compare what you declare with your bank statements and with minimum expense guidelines set by the regulations.

Your credit history

How you’ve handled credit in the past matters. Missed payments, accounts in arrears and judgments all count against you, while a history of paying on time helps.

Why applications get declined

• Not enough left over each month after expenses and existing debt
• Income that can’t be verified from statements or payslips
• Current adverse listings on your credit record
• Being under debt review
• Details that don’t match, such as a different name on the bank account

How to prepare

• Work out your own numbers first. Our budget planner shows what’s left after your essentials and current debts.
• Check your credit report so you know what the lender will see. Here’s how to get it for free.
• Have three months of bank statements ready in digital form.
• Ask for a realistic amount. A loan that clearly fits your budget is more likely to be approved.
• Be honest about your expenses. Lenders compare your answers with your statements.

General information only, not financial advice. Instant Loans SA is a credit broker, not a lender.