Can I Afford This Loan? Free Affordability Calculator

Before you apply for a loan, the most important question isn't "can I get approved?" — it's "can I genuinely afford the repayments?" This calculator helps you answer that by comparing your income and outgoings against the loan you're considering, so you can see the numbers clearly before making a decision.

How to use this affordability calculator

1. Income: enter your salary (monthly or annual) plus any additional monthly income from benefits, side work, or other sources.
2. Outgoings: add your rent or mortgage, regular bills (utilities, council tax, insurance, phone, food, transport), and any existing credit repayments you're already making.
3. Loan details: enter the amount you're thinking of borrowing, the term, and the representative APR from the lender's advert.
4. Review the results: the calculator shows your disposable income, estimated loan repayment, a suggested maximum you could reasonably afford, and a clear affordability rating.

What the affordability rating means

The calculator compares your estimated loan repayment against your disposable income and gives you a straightforward rating:

• Comfortable: the repayment is well within your budget. Your disposable income easily covers it with room to spare for unexpected costs.
• Manageable: the repayment fits, but it takes a noticeable share of what's left after your essential outgoings. Worth double-checking your budget.
• Tight: the repayment takes a significant portion of your disposable income. You'd be running close to the line each month, with little buffer for anything unexpected.
• Likely unaffordable: the estimated repayment would stretch your finances beyond what's realistic. Applying could put you under real financial strain.

Why lenders look at affordability differently

This calculator uses a simple income-minus-outgoings approach to give you a practical sense of whether a loan fits your budget. But regulated UK lenders are required to carry out a more detailed affordability assessment before approving any application. Their checks typically look at:

• Your income after tax and National Insurance (not your gross salary)
• Your full credit history, not just existing repayments
• Whether you have dependants or other financial commitments not captured here
• Your employment stability and type (permanent, contract, self-employed)
• Your spending patterns from bank statements or open banking data

A green light on this calculator does not guarantee you'll be approved by a lender, and a warning here does not mean you'll definitely be declined. It's a practical starting point, not a lending decision.

What counts as "affordable"?

There's no single rule that applies to everyone, but a common guideline used by debt advisers is the 30% rule: your total debt repayments (including the new loan you're considering) shouldn't exceed 30% of your disposable income. If repaying a new loan pushes your total credit commitments above that threshold, it's worth pausing and reviewing your options before applying.

Our suggested maximum repayment uses this 30% benchmark applied to your disposable income alone, giving you a figure that leaves headroom for the unexpected.

What to do if the calculator shows a warning

• Try a smaller loan amount. Reducing how much you borrow, even by a few hundred pounds, can make a significant difference to the monthly repayment.
• Extend the term. A longer repayment period lowers each monthly payment, though it does increase the total interest you'll pay.
• Review your outgoings. Are there any bills or subscriptions you could reduce or pause while you're repaying the loan?
• Check other options first. Our guide on alternatives to payday loans covers options worth considering before taking on new credit.
• Get free, independent help. If you're worried about affordability or already managing existing debts, speak to MoneyHelper or StepChange before borrowing. Both services are free and confidential.

Budgeting beyond the calculator

A loan repayment is just one line in your monthly budget. For a more detailed look at planning your finances around a new loan, see our practical guide on how to budget for loan repayments. It walks through a step-by-step approach to building a realistic budget that accounts for your income, essentials, savings goals, and credit commitments.