What should be included on the income and expenditure?
The customer needs to be honest about their income and expenditure, it is in your and their best interest. To read more on affordability take a look at our blog which explains the importance of affordability.
As well as being honest, there are a few things to remember when your customer fills out their income and expenditure -
The income should be their net income.
The income and expenditure should be based solely on the person that is signing the agreement, not including their partner or any other person that may contribute financially in their life. This goes for both what their income is and what they pay for as an individual. If the person receives money from their partner or someone else, they can include this as income as a type of "allowance".
If they receive any benefits, they must include this in both what they bring in and what they pay out. For example, if a customer receives housing benefit and includes this within their income, they must then include that as their rent payment. They must not include it and then say they pay £0.00 rent, as this gives the illusion that they have a larger disposable income than they do in reality.
Where a customer pays no or little towards important items, such as rent, council tax and food; the system will ask for the reason they don't pay for that particular item. It is important that the reason is valid and clear.
We always recommend that the disposable income the customer is left with is at least twice that of the instalment amount. This will give a good indication that the customer can realistically afford their repayments and also ensure they still have some disposable income should they have an unexpected payment crop up.
The information that the customer provides will be shared with credit reference agencies.