Loan Eligiblity Checker

 

How the Loan Eligibility Checker Works

The Loan Eligibility Checker is a simple tool designed to help users quickly determine whether they are eligible for a loan based on their financial information. Here’s a step-by-step explanation of how it works:

1. User Inputs Financial Information

• Monthly Income: The user enters their total monthly income. This includes all sources of income such as salary, business earnings, rental income, etc.
• Monthly Expenses: The user inputs their total monthly expenses. This includes all regular outgoings such as rent, bills, groceries, loan repayments, etc.
• Desired Loan Amount: The user specifies the amount of money they wish to borrow.
• Loan Term: The user indicates the number of years over which they intend to repay the loan.

2. Calculation of Available Income

• The tool calculates the user’s available income by subtracting their monthly expenses from their monthly income: $$\text{Available Income}=\text{Monthly Income}-\text{Monthly Expenses}$$

3. Calculation of Monthly Loan Repayment

• The tool then calculates the monthly repayment amount for the desired loan. This is done by dividing the total loan amount by the total number of months in the loan term: Monthly Repayment=Desired Loan AmountLoan Term×12\text{Monthly Repayment} = \frac{\text{Desired Loan Amount}}{\text{Loan Term} \times 12}Monthly Repayment=Loan Term×12Desired Loan Amount​

4. Eligibility Determination

• The tool compares the user’s available income with the calculated monthly loan repayment:
  • Eligible: If the available income is greater than the monthly loan repayment, the tool indicates that the user is eligible for the loan.
  • Not Eligible: If the available income is less than the monthly loan repayment, the tool indicates that the user is not eligible for the loan.

5. Displaying the Result

• The result is then displayed on the screen, letting the user know whether they are eligible for the loan or not based on the provided information.

Example Scenario

• Monthly Income: ₦200,000
• Monthly Expenses: ₦100,000
• Desired Loan Amount: ₦1,000,000
• Loan Term: 5 years

Calculations:

• Available Income: ₦200,000 - ₦100,000 = ₦100,000
• Monthly Repayment: ₦1,000,000 / (5 * 12) = ₦16,667

Eligibility Result:

• Since the available income (₦100,000) is greater than the monthly repayment (₦16,667), the user is eligible for the loan.

Conclusion

The Loan Eligibility Checker is a quick and user-friendly tool that allows users to assess their loan eligibility by comparing their available income with the potential monthly repayments of the desired loan. This helps users make informed decisions before applying for a loan, saving time and reducing the likelihood of rejection.