How do I know how much I can borrow based on my income?
“I intend to apply for credit at the bank, but the concern is that I do not know how much I can borrow. This is one of the most common problems for borrowers. It is important to know that several criteria will come into play when the credit institution determines the maximum amount it will give you and at what rate. Through this article, you will learn how to calculate the maximum amount you can borrow based on your income and how to lower your rate to save money.
How much can I borrow based on my salary?
You wonder how much you can borrow based on your salary, know that it will depend on several things, the type of consumer credit you want, the conditions will not be the same depending on the credit you choose, your background, if you have several credits in progress this will come to evade your income, borrow you alone or with a co-borrower, etc .
There is above all a rule that you should know as mentioned on the website credifina.com, you should in no case exceed a debt ratio greater than 33%. The calculation is quite simple to do, for example, if you touch 1500 euros net per month you can not go beyond 500 € monthly. Once you know this rule you will just need to use online simulators that you find on most banks to find the optimal amount you can borrow.
Another factor to know, the repayment term should be as short as possible if you want to pay the overall cost on your consumer credit as low as possible. It will, therefore, be necessary to ensure that your amount does not exceed your debt ratio of 33% and that you do not commit to funding over too long because in this case, your credit may come back to you more expensive. The simplest is once you’ve found the right amount for your consumer credit, you’ll be playing with the simulator sliders to find the most optimal duration that will go with the maximum monthly payment that you should not exceed.
To maximize the chances of having a loan for the best fixed, it is then advisable to use a comparator of online credit agencies, a small tool that will allow you to compare fifteen credit organizations simultaneously in depending on your profile, the amount you want, the type of financing and the duration. Afterwards, you will receive by mail the best offers that you will only have to consult and choose the bank that will make you the most savings, with this method you can save a few hundred euros easily.
I start with a loan simulation
You have to go through several steps before subscribing to consumer credit. Above all, I advise you to start with a loan simulation. This is the best way to find out how much I can afford to borrow. We must take into account several details to be sure to borrow, and avoid the refusal of banks or the risk of over-indebtedness. Among other things, we are talking about your current expenses, the income you receive per month and your credits already in progress. The difference between your income and these financial obligations is called the “possible debt ratio”. It must be 30% for your first loan and a little more for the second or third loan. The result of your simulation should allow generating enough income to live well, hence the importance of this audit. Fortunately, credit simulation can be done nowadays on dedicated platforms. You must enter in the simulation forms the capital you need for the realization of the project, your income, and your expenses. The result should give a debt ratio of 30%. The ideal capital to borrow as well as the duration of the contract will be given to you in a few minutes by the simulator.
The loan amount will depend on my borrower profile
You must know that banks rely on your borrowing profile to determine the ideal capital they can give you. The unemployed among others, who only receive allowances can not claim capital of more than 3,000 euros. They can ask for up to 5,000 euros, provided they have a joint surety. Available capital will vary depending on whether you are on a fixed-term or permanent contract; whether you have a position of responsibility or not; that you justify a good salary or a small income; and money-back guarantees that you present. Lending institutions already have a very specific profile of what they call “the best investments”. These favorite borrowers of banks are among others those in their thirties, with a good income and a contract on a permanent contract. They can claim a credit of 75,000 euros, the limit of conventional personal loans.
Simple tips for determining the amount of your loan
If the lending institutions can offer you an assigned credit or personal 75 000 euros, you are not obliged to claim everything. Everything will depend primarily on your needs. You must therefore well define your project. If it’s simply getting financing to pay your bills, revolving credit can do the trick. However, if you have a major project in mind, I advise you to compare the quotes of the various providers who will carry out your project and you based on this amount to find the ideal amount to borrow. If you have the possibility, you can still finance 20% of this project from your pocket. It is the “personal contribution”. Banks do not try to understand where this money comes from. It may be the sale of your property or another consumer credit. The important thing is to have a personal contribution available. This will impact not only the quality of your borrowing profile but also the cost of borrowing.