I can never ever even begin to stress enough at just how important affordability is on finance. If people are unable to afford the finance then the chances are repayments will have to be missed on the debt. Missing loan repayments on loans or other borrowing will nearly always result in severe negative consequences for that person and because of this most people will always want to avoid this from ever happening. It will never matter whether a person is borrowing payday loans or other short term loans, instalment loans, credit cards or even mail orders they must be repaid back as agreed to the financial lenders. Below is a detailed way of how people can budget for the finance to make sure it is affordable and also how some finance types are more easily repaid than others.
If a person can locate what their disposable income is on average they can use that amount to see if finance can be taken out and then can be affordable. This amount of course could vary from month to month however, it still should state whether finance is affordable. People locate the disposable income also known as the spare income by looking to the month coming ahead, then adding up all their income for that period. This can include their salary, plus any benefits they are due for that period etc. Then from that figure the same person over the same time frame can deduct all their monthly expenditure. This in turn can include their rent costs, any debts they may have as well as living costs such as transport and food cost. Once this full calculation is done then the amount left afterwards is that person’s disposable income. Now if that figure is high then the chances are finance is affordable however, if low or if it does not cover any payment that is due on a debt then no application should even then be considered for this or other unaffordable finance such as short term loans.
It can be common that some finance types are then must more suitable than others to repay. People will have their disposable income and although this may change slightly from month to month this person should know what they have each period to themselves after their bills are paid. Of course then some people have much more disposable/spare than others. If people borrow money they may soon establish the fact that some are more affordable and realistic for their financial situation than others. Take payday loans as the borrowing example, when these are obtained people are often required to clear their debt in one go just as soon as they are paid again from their employer. Now for some people repaying a loan back in full as well as paying other bills can be tough and for some people it is just not affordable. There can now then be other short term loans where similar amounts are borrowed but then people can spread the overall cost of the debt so they can repay back over a term that suits them. This may then turn out to be a much better financial option.