Indeed, we often hear, in our entourage or in the press, of a debt ratio of 30% not to be exceeded.
This rule does not exist ... It is without legal basis and no credit institution is required to apply it.
The budget rules are different depending on the bank, the borrower, and the actual amount of income!
Each bank defines its own budget study strategy. It is obvious that Paydaychampion does not use the same criteria for granting credit as Barclays!
Your budget is not seen in the same way depending on whether it is your personal banker who studies your file or a company that does not know you!
The lifestyle and expenses of a borrower also influence the balance of a budget.
An individual can regularly spend a large part of his income on clothing, computer equipment or travel without this being taken into account in his budget: these are not fixed charges!
The actual amount of income is also important. If we applied this 30% rule, a single minimum wage earner at 1000 us dollars per month would have to spend 333 us dollars to pay: his rent, his taxes and his possible credit ... in other words it is impossible!
And a framework touching 4500 us dollars would have only 1500 us dollars of possibilities ...!
In short, for your budget, everything is a question of balance and it is you who, first of all, must know your debt possibilities. Make the necessary calculations with your income and especially count all your expenses, rents, loans, taxes without forgetting the EDF, telephone bills, the nanny ...
This will give you a real idea of your financial possibilities ... before applying for credit!
Patrice L. : I am currently looking for an organization wishing to redeem my credits, ie € 29,000 overdraft included, for a monthly payment of € 678 per month. My income is 1500 € net, I know that I could easily get by with a monthly payment of 300 € per month. The 30% law blocks credit companies but my question is about the duration: is the credit company or bank free to spread it over 10 years, or even 15 years on this type of loan? Thank you.
CreditSpace: several points in relation to your question:
- there is no 30% law that blocks credit institutions
- to our knowledge, there is no credit company that offers personal loans over 10 or 15 years ... except for mortgage loan repurchase (but you must be an owner).