Affordability is not enough

INGRITH TJIVELA​

Before anyone is given a loan, a question gets asked. It is a reasonable question, and the industry has built sophisticated systems to answer it. Can this person afford to repay?

What does not get asked, at least not often enough anyway, is a different one. What happens to this person when something goes wrong? Those are not the same question. The gap between them is where a great deal of financial hardship quietly begins.

Affordability is a snapshot. It captures income, existing obligations, the arithmetic of what a repayment will cost against what a person earns. When the numbers work, the loan gets approved. The logic is clean, the framework established. On paper, it protects both sides.