Short Term Loan Eligibility The Significance of Disposable Income
Short term loan eligibility can be broken down to income along with its, credit score or credit history, proof of identity and chosen loan amount. Credit score is not significant for lenders offering unsecured short term loans. If there is no credit check, then such a loan is available for anyone regardless of their credit history. However, income will play an unavoidably significant role. What borrowers must understand is the difference between income and disposable income. This will determine how much loan amount you can qualify for.
For someone who earns well over fifteen hundred or two grand a month, a loan amount of a thousand quid may seem repayable. Borrowers will consider a thousand quid as a reasonable amount but the lender may not think so. This is because the lender doesn't consider the income in isolation. It considers the disposable income. Anyone with significant liabilities will have to bear an additional burden and will have normal expenses every month. This may leave someone with a hundred quid to spare, more or less. It is this disposable income that instils confidence in lenders.
Lenders do not expect that borrowers will put their normal lives on hold or will not pay for their essentials and instead repay the loan. Had that been the case a borrower earning a thousand quid could have repaid the entire grand borrowed in one month. This doesn't happen in reality. Hence, if you think your income is sufficient for a particular loan amount and yet the lender you choose rejects your application, know for certain that it is due to the disposable income corresponding to your asked loan amount. That is of course if the other eligibility criteria are already fulfilled. Choose a loan amount that is deemed repayable given your disposable income. Don't forget to account for the interest and hence the instalments you would have to pay.