6. Most lenders, especially mortgage and auto lenders, use your debt to income ratio to determine the loan amount you qualify for For example, a mortgage lender will use your debt to income ratio to figure out how much mortgage you can afford after all your other monthly debts are paid
27. You will then be debt free! Imagine how great that would feel!
28.
Notas do Editor
For example, let’s assume you make $3,000 a month. Let’s also assume you spend $300 on credit card payments and $450 on an auto loan. Your ratio calculation would be $750 / $3,000 = 0.25. Multiply that by 100 for a debt-income-ratio of 25%. In this example, you spend a quarter of your income on bad debt When it comes to debt, whether good or bad, the lower the debt you have, the better. A bad debt ratio beyond 10% is too high and often is a sign that you are overloaded with debt. In this scenario, you would have too much bad debt.
Example In our example, Sam's debt to income ratio is 38.5%. This isn't a bad ratio, but it could become worse if Sam increases his monthly debt payments without increasing his income.