Question

Andy's yearly income is 40,000. According the 20/10 rule, what would Andy's debt load be on a 15,000 personal loan? Would Andy's debt loan follow the guidelines of the 20/10 rule? Provide a reason for your answer

Answer 1

Andy is not following the guidelines because his total Loan amount is 37.5% of his Total annual income which should be below 20%.

Step-by-step explanation:

20/10 Rule

According to this rule, your total debt should be below 20% of annual income and keep your all payments of loans no more than 10% of your monthly income.

As per Rule:

(Total debt / Total annual income) *100 = (15000/40000) *100= 37.5%