Many times we end up blaming the bank for not giving us a loan, but you have to do a mea culpa. If they don’t give us a loan, it’s because we have done something wrong. And if we were really potential customers, the bank would have no problem giving us the amount we asked for.
The borrowing capacity of a person is a determining factor when it comes to financial institutions to accept or not give money . Do you know which one is yours? Maybe you already passed it and that’s why your requests are not approved. Let’s find out!
Let’s talk clearly what is borrowing capacity?
Your borrowing capacity is the maximum amount for which you can borrow without putting your finances at risk. Ideally, the maximum you pay a bank for a debt is 30% of your income. So if you already have a debt for this value, it is unlikely that they will give you another loan in parallel.
Take a paper (or open an excel) and add all your income by the way you make your personal budget ! Now lend him all the expenses you have in the month. What is left over is what you have left to commit to paying for a debt.
Let’s see, an example: Rosa earns 1,500 soles per month and according to her personal budget, after making all her accounts and allocating money for her savings, 450 soles remain.
Although Rosa can acquire a debt that involves paying each month the S / 450.00 is not recommended and is that if she had an emergency, she could not face it without jeopardizing the payment of her debt.
The formula to know your ability to pay
Add all your monthly income . At this amount, lend your expenses (all, including your bank debts!). To the result divide it among your net income. That way you will know what percentage of debt you have. In Rosa’s case it would be: (1500-1050) / 1500 which results in: 0.3. In other words, she has a borrowing capacity of 30%.
If when you make the accounts your borrowing capacity is 10%, you are probably not a potential candidate for the banks. For them a debt capacity of 30% or more is more attractive.
In any case, it will also depend on the amount you need to borrow and that is to be realistic if our borrowing capacity is 10% and this percentage only represents S / 100 soles, it is unlikely that you will access large loans such as a vehicle credit or mortgage.