## Debt ratio: why calculate it?

The debt ratio is one of the key data to study if you want to take a loan . Based on this indicator, the conditions for granting your loan may change. This is why it is important to simulate the debt ratio before taking out a consumer or real estate credit . Our debt ratio calculator gives you the information you need, with ease and without commitment.

The debt ratio makes it possible to know the share of your monthly income allocated to the payment of the installments of your various loans. The calculation of the debt ratio is therefore essential if you want to finance a project with a loan . It will verify that the new deadlines that will generate this loan will not hurt your overall financial situation.

## How to calculate your debt ratio for a loan?

The calculation of the debt ratio is simple. You need to start by listing your different sources of income as well as your fixed costs . If you take out the loan with two, do not forget to list the expenses and income of the two co-owners of the loan.

Several elements can be taken into account for the income :

• your taxable salary;
• your possible contractual premiums (like a 13th month for example);
• your profits, if you have an unpaid activity;
• your other potential sources of regular income: rents, annuities, pensions, etc.

Note : sickness benefits and exceptional bonuses are not taken into account. In addition, some financial organizations do not include allocations in the calculation of the debt ratio.

For expenses :

• You have to add up all the regular expenses like your rent for example, any pension payments, etc.
• Also remember to include all the monthly payments of your credits in repayment, if you have any.

Then you simply divide the sum of your recurring expenses by the amount of your income .

Finally, multiply the result by 100 . This will give you a percentage of your debt ratio.

## How our debt ratio simulator works

Thanks to our simulator, you just have to fill in some information and the calculation of your debt ratio will be done automatically.

At the level of your resources:

• Are you alone at work or does your household have two sources of income?
• How much are your professional earnings (net wages and potential bonuses)?
• Do you have other sources of regular income (rents for example)? If so, how much are they?

At the level of your expenses:

• What is the amount of your rent if you have one?
• Do you pay back a mortgage and / or consumer loans and if so, how much are their monthly payments?
• Do you have other current expenses (alimony for example)?

You will then have immediate access to your debt ratio, as well as the amount of your remaining life.

## What is the maximum debt ratio?

The typical debt ratio not to exceed is usually 33% , including the new monthly loan payments you plan to contract. Beyond this 33%, financial organizations can be more cautious to grant a loan, believing that they take a risk of unpaid too high.

However, the law does not prevent you from taking out a loan if your debt ratio exceeds this threshold. In fact, the decision is up to the lending institution to whom you are addressing. Some may refuse your loan even if you have a debt ratio lower than 33%, or accept it even if you have a debt ratio above this threshold.

In concrete terms, there may be some flexibility for specific cases, including:

• For loans with a short repayment term : in the event of repayment difficulties on the part of the borrower, the lender has the possibility of extending the repayment term in order to reduce the amount of loan maturities.
• For high incomes : since the rest is important, lenders can accept a higher debt ratio.
• For civil servants : job security for teachers, gendarmes, firefighters, etc. is an additional guarantee that may encourage lenders to be more flexible about the maximum debt ratio accepted.

## The First Loan for Free is a Time Trap?

The first loan is free, which is known to most of us, including advertising with the offer of Meybank addressed to new customers. It seems an interesting and at the same time a surprising proposition. Listening to the advertisements of this offer, probably more than one of you wondered what kind of parish have an interest in borrowing money for free. Certainly some of you also came to think that the first loan must have a catch for free.

How did it happen that the institutions known for providing horribly expensive loans introduced the offer, on which they do not earn? The first loan is not a free charity action, nor is a Christmas promotion. So what is it? What benefits does parabankes give you?

### A way to acquire new customers?

It is certainly the way in which loan companies want, or rather try to win new customers. Just as everyone almost knows the time limits, they know their high costs. Therefore, acquiring a new client is quite a challenge for every parabank. The cost associated with taking advantage of the delay effectively scares away the majority of potentially interested.

### The first loan for free is a time trap

Ask why? Well, free loans are advertised as being completely free and that’s the way it is. You borrow, for example, € 1000 for 30 days and after the lapse of time, it returns exactly the same as it borrowed, that is € 1,000. However, this is not a problem. The trap lies in the fact that the parabank counts on the fact that the borrower will not be able to return the money after 30 days. What happens then? The customer is forced to use the repayment service for another period, e.g. 30 days, but he must pay a fee for this. These are not small amounts, since the parabolas usually use the same fees when renewing, as in the case of the next loan, i.e. high. Most often they are in the amount of interest resulting from a loan, i.e. if we borrowed € 1,500 for 30 days and interest amounted to € 450, the same will cost a prolongation. There are also offers, where the interest payments on the loan amount are applied for extending the repayment for another period. Such a fee in this case may amount to over 30%, i.e. with a loan of € 1000 for the extension of the refund period, we will pay over € 300.

### Situation without exit?

Of course, you can not pay your debt at all, but it is associated with even higher costs. This is no way because the lender will take the case to court. As a result, subsequent costs of court and enforcement proceedings will follow.

### Count forces on intentions

With lower amounts of collected debts, we are not likely to face such situations, because we should pay back a few hundred zlotys without any problems. The problem can occur at higher sums. By borrowing, for example, € 2,000 per month, you need to be aware of the fact that in 30 days you will need to have 100% of the sum to return it. That is why it is so important to properly assess your abilities and not to borrow extensively.

### Meybank earn money on clients!

Describing how the Meybank work, one word “how can not be done, how can I do it?” As you can see, the loan companies assumed that if it is difficult to get a customer interested in a loan under standard conditions, you need to find another way to get it. This is how the first loan offer was created for free. The client, who is encouraged by the lack of fees, borrows money for which he ultimately incurs the costs in the form of a payment for the prolongation of repayment for the next period. Therefore, it is safe to say that the first loan for free is a temporary trap.

## Loans in 24 hours without payroll – immediate financing

Loans in 24 hours without payroll are a category of loans aimed at those who have difficulty accessing traditional loans but need immediate liquidity. Certain guarantees are needed to obtain rapid financing: the most requested by banks is the demonstration of a stable income, in the form of a paycheck or a pension slip. However, not everyone, starting from the self-employed to reach precarious and unemployed, can boast such guarantees. What if you need financial help quickly?

Fast loans without paychecks are often included in online loans

These small loans are provided by financial companies that operate on the web, which greatly reduces the time for granting the loan. The traditional loans, in fact, provide for direct contact with the bank branch (many banking groups, however, now also operate online), a series of bureaucratic procedures to grant the amount (such as the preliminary investigation) and finally the disbursement of the loan. A long journey for those who need money in a short time. Operating online, these times are considerably shortened and flexibility is achieved.

Obviously, even immediate online loans still require some form of guarantee, such as the pay slip

Anyone who cannot present it may be in trouble. One of the methods to receive the financing could be constituted by the signature of a third guarantor who takes charge of any insolvency of the applicant.

It must however be specified that online funding, at most if granted in such a short time as 24 hours, is of a lower amount than those normally obtainable. The figure that can usually be obtained, depending on the company to which it is addressed, is between 500 and 1,500 euros . Therefore those who exploit this possibility gain great flexibility, but at the same time cannot expect significant sums.

It is also necessary to pay attention to the wording “24 hours”: loans in 24 hours without pay can also be advertised on the market, but one day is really a very short period to obtain a loan. Better to talk about urgent loans , which will certainly be paid out more quickly than a normal loan.