Meaning
This process helps determine an individual’s financial capacity to manage new credit or payments.Definition
Affordability Assessment is the evaluation of an individual’s income, expenses, and existing debt to ascertain their ability to comfortably meet new financial commitments, like loan repayments or subscriptions, without undue hardship.Key Factors
Includes net income, essential living costs, existing loan obligations, and credit history.Purpose
To ensure responsible lending, prevent over-indebtedness, and help consumers make sustainable financial decisions.Author
