Step 1: Net disposable income
Take home pay minus essential outgoings (rent/mortgage, council tax, utilities, food, existing debt payments, childcare). What's left is your "disposable income" from the lender's point of view.
Step 2: Stress-testing
The lender adds a buffer — usually 20-30% on top of the actual monthly payment — to make sure you can still afford it if interest rates or costs rise. Your monthly car finance payment plus stress buffer must fit inside your disposable income.
Step 3: Bank statement checks
Beyond the maths, underwriters read your last 3 months of bank statements looking for gambling activity, unauthorised overdrafts, returned direct debits, and "payment-shy" patterns. All of these can decline an otherwise-affordable application.
What tightens affordability instantly
Unauthorised overdrafts in the last 3 months, gambling spend above 5-10% of income, missed direct debits, buy-now-pay-later spend visible on statements, and multiple existing loans.
