Banks provide personal loans only after checking the Debt to Burden Ratio of the loan applicants. It generally determines the ability of the applicant by considering the cash flow whether he/she can repay the loan without any delays. The incoming cash flow is compared to the outgoing cash flow which shows that an additional payment can fit into the list or not. Banks want to put neither the applicants nor themselves at risk. So if the DBR is more than 50% banks reject the application.
It is preferable to calculate your DBR by yourselves rather than applying for the loan and getting rejected. Even rejected applications can have a smaller impact on the credit score.
How to Calculate your Debt to Burden Ratio?
Calculating your DBR is very simple. You just need to consider your monthly incoming expenses and outgoing expenses to find whether you can afford the monthly installment of the new loan.You can use our calculator to make it quick and easy.
Enter your monthly income like salary, business profits or etc.
Enter if you get any additional payments apart from the major income like salary.
Enter Mortgage Loan EMI (if you don’t have mortgage loan currently, give 0).
Enter Car Loan EMI (if you don’t have car loan currently, give 0).
Enter Personal Loan EMI (if you don’t have personal loan currently, give 0).
Enter Student Loan EMI (if you don’t have a student currently, give 0).
Enter your house rent (if you don’t have house rent currently, give 0).
Enter your credit card limit (if you don’t own a credit card, give 0).
Our calculator displays your monthly income and debts you need to pay, along with the Debt to Burden Ratio.