Question

Affan Chawdry has monthly net income of $1,050. He has a house payment of $450 per month, a car loan with payments of $375 per month, a Visa card with payments of $50 per month, and a credit card with a local department store with payments of $100 per month. What is Affan's debt payments-to-income ratio

Answer 1

Answer:

92.86%

Explanation:

Debt-to-income ratio is a comparison or personal debts against income.  It is used to assess an individual ability to accommodate more debts.

The formula for for calculating Debt to income is

Debt to income is   Total of Monthly Debt Payments​​  

    Gross Monthly Income        

For Affan, Total debts are $450 + $375 + $50+ $100 =$ 975

Gross income is not given , we use net income which is $1,050

Debt to income ration =  $975/$1050

=  0.92857 x 100

= 92.86%