The affordability engine
Cadence assesses affordability with a German Haushaltsrechnung, a household budget calculation, framed as the statutory creditworthiness assessment, the Kreditwürdigkeitsprüfung. It is arithmetic over categorised cash flow, followed by fixed rules.
The Haushaltsrechnung
The budget reduces a statement to one figure: how much income remains each month once unavoidable costs are removed. Everything the engine decides rests on this calculation.
- Net monthly income
- −Living-cost allowance (Pauschale)
- −Rent
- −Existing obligations
- =Available income
Rent and obligations are read from the categorised transactions, so the budget reflects how the applicant actually spends rather than what they declare.
Living-cost allowance by household size
The Pauschale is a standard monthly figure for everyday living costs such as food, utilities and incidentals, scaling with household size. It deliberately excludes rent and existing credit, which are counted separately from the detected transactions.
| Household size | Monthly allowance |
|---|---|
| 1 person | 950 € |
| 2 people | 1.350 € |
| 3 people | 1.700 € |
| 4 people | 2.050 € |
| Each additional person | + 330 € |
These are demo figures. In production the table would track the published reference values for the assessment, but the mechanism is identical: a transparent, look-up allowance rather than a discretionary estimate.
What a clean pass requires
Once available income is known, the requested instalment is tested against a fixed set of thresholds drawn from the active consumer-loan product. Each is a named, inspectable parameter.
Affordability buffer
Available income must cover the new instalment with margin to spare, at least 1.3 times the instalment. A budget that only just balances is not treated as affordable.
Debt-to-income ceiling
Existing obligations plus the new instalment may not exceed 40% of net income. Beyond this ratio the application cannot pass automatically regardless of headroom.
Stability & tenure
Income must score at least 88% on regularity and there must be at least 3 months of statement history. Thin or erratic income is referred to a human rather than auto-approved.
Interest-rate stress test
The instalment is recomputed at 10.9%, which is the 7.9% demo rate plus a 3.0 percentage-point shock. It must still fit the budget, so affordability survives a rate rise.
Adverse markers
Categorised signals such as gambling activity or returned-payment fees flag the file for human review. These are surfaced explicitly rather than averaged away into a score.
The model never decides
Transparent, auditable code
The decision is a pure function of the categorised figures and the published thresholds. The same inputs always yield the same outcome, every threshold is a named constant, and the full calculation is recorded: income, allowance, obligations, buffer, ratio and stress instalment. An officer or auditor can re-derive any approve, refer or decline by hand.
The language model labels the cash flow. It contributes no judgement to the outcome. The decision is defensible because it stays in deterministic code: there is no opaque score to explain after the fact, only arithmetic and rules anyone can follow.