What Are Debt Ratios?
Your debt-to-income ratio can be defined as the percent of your gross monthly income that is used to pay outstanding debt. The debt--to-income ratio is an
important factor that is taken into consideration when determining the loan amount that we believe you can repay. Dollar Bank generally limits the
debt-to-income ratio to 38%.
To calculate your debt-to-income ratio, you will need to determine your gross monthly household income. That
includes the total income from adult wage earners, plus any additional verifiable income such as regular dividend payments.
Next, you will need
to add together all of your monthly debt payments. This includes your rent or mortgage payment, outstanding installment loan and line of credit payments,
as well as bank and store credit card bills.
Once you have the total of your monthly debt payments and your gross monthly income, simply divide
the former by the latter. You can try to calculate your debt-to-income ratio following the example below. Remember, this is just a tool to give you an idea
of your debt ratio. Lenders will take a thorough look at your financial situation when you apply for a loan.
If you have any questions, please speak
to a Dollar Bank Representative. They will be happy to assist you.
| Example |
|---|
| Rent or mortgage payment | $ 350 | $________ |
| Auto loan payment(s) | 250 | $________ |
| Personal loan payment(s) | 100 | $________ |
| Education loan payment(s) | 0 | $________ |
| Line of credit payment(s) | 50 | $________ |
| Bank credit card payment(s) | 35 | $________ |
| Store credit card payment(s) | 75 | $________ |
| Other monthly debt(s) | + 40 | $________ |
| Total Monthly Debt Payments | $ 900 | $________ |
| Gross Monthly Income | ÷ $ 3,000 | $________ |
| Debt-To-Income Ratio | = 30% | ________% |
To try our loan calculators,
click here.
The information presented in this publication is general in nature; it is not our intention to provide specific
advice to individuals or a comprehensive discussion of the subject matter. We suggest that you consult with your
financial or tax advisor, accountant or attorney to obtain specific advice or comprehensive information.
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