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The loan application is for $230,000. You see that the applicant has an annual salary of $83,000 and a savings account balance of $50,000. The applicant also has a car payment of $315, a student loan of $140 and a boat loan of $96. How likely are you to approve the loan?

User RadBrad
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2 Answers

1 vote

Answer:

A: Very likely; recurring debt is considerably less than what is allowed.

Step-by-step explanation:

EDGE 2022

User Michael Cheng
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1 vote

Answer: likely

Explanation: likely to get a loan because the recurring debt is very close to what is allowed. A debt-to-income ratio (DTI) is a personal finance measure that compares the amount of debt you have to your overall income. Lenders, including issuers of mortgages, use it as a way to measure your ability to manage the payments you make each month and repay the money you have borrowed. A low debt-to-income ratio demonstrates a good balance between debt and income. In general, the lower the percentage, the better the chance you will be able to get the loan or line of credit you want. On the contrary, a high debt-to-income ratio signals that you may have too much debt for the amount of income you have, and lenders view this as a signal that you would be unable to take on any additional obligations. In this instance , the recurring debt is close to what is allowed by the financial institution .

User Tucker
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