A high DTI is a risk not only for the lender, but also for the borrower. Here are the most significant of them:
Lack of a financial cushion . If most of your income goes to paying off debt, it is difficult to save money. This means that if you need to make urgent large expenses, you will have to apply for a new loan. This will further increase the DTI.
Financial limits . In order to pay off loans, you often have to limit your spending. It is more difficult to go on vacation, make repairs, buy expensive equipment.
Inability to make long-term plans . When you can't save, your plans are limited to paying off your current loans as quickly as possible.
Worsening of credit history . Over-indebtedness increases the cambodia mobile database likelihood of delinquencies that are recorded in the credit history. Because of this, it is more difficult to obtain new loans on favorable terms.
Potential loss of property . If you stop paying your creditor, the case may go to court. Then bailiffs can seize some of your property to pay off the debt.
Stress . All of the above leads to the gradual accumulation of stress, which affects the quality of life.
How the calculation is done
The debt burden is calculated using the formula:
PDN = (SP / DZ) ´ 100
Transcript:
SP is the sum of all monthly payments of the borrower. It includes payments on the loan for which the application is submitted.
ДЗ — borrower's monthly income.
Let's give an example of calculations:
Irina earns a salary of 65,000 ₽ and pays off a small loan to buy a smartphone. She pays 5,357 ₽ monthly. Irina applies for a large loan, the payment for which will be 15,869 ₽.
To calculate the credit load, you need to add both payments together and then substitute the values into the formula.
This load is considered moderate. The chances of approval of the application are high, provided that Irina has a good credit history.
The nuances of assessing solvency
When considering an application, the lender looks not only at the DTI, but also at other criteria that help determine solvency. These include:
Marital status and spouse's income . With high debt load, it is easier for borrowers who are married to get a loan. At the same time, they can check the spouse's credit history: if he also has a lot of loans, the application will most likely be rejected.