When liquidity is needed, the question may arise as to whether there is a debt limit on the payroll or the income received to request a loan. This doubt is more than reasonable since in the end the income received determines the viability of the operation.
On the debt limit in access to the loan
It is known as borrowing capacity at the maximum value of the loan that a person, family or organization can request. It is important to know this value since it will determine the viability of the loan operations.
When a borrower exceeds his own loan capacity he puts his economy at risk. Since you might be unable to repay your loans. Most financial experts place this limit at around 35% of the borrower’s recurring income. Of course, this value depends on factors such as:
The number of loans requested. The higher your interest, fees and associated expenses, the narrower the debt capacity fork.
– The possibility of receiving extraordinary income. For example, a third-party worker can provide with some precision how much your payroll will amount to (unless you charge commissions or other extras). However, if a self-employed (self-employed) worker keeps prudent accounting, it is easy for him to raise his debt threshold thanks to additional income.
– The maturity date of the liabilities. If the borrower has loans about to expire he can also afford to raise his debt threshold. As you pay off some loans you will gain ease to pay the remaining.
How to calculate borrowing capacity
In short, the percentage of income that can be dedicated to maintaining loans depends on many circumstances. However, a relatively accurate form of calculation is:
Take the gross value of recurring income (rents, investments, payroll …).
The value of all recurring expenses (supplies, services, rentals …) is subtracted.
A percentage of 30% is applied to the result (more conservative cases or in which the possibility of reducing income or increasing expenses is foreseen). And 45% (cases in which loans will be repaid in a short period of time, or when it is expected that income can be increased or expenses reduced).
Does this mean that you cannot apply for loans beyond the debt threshold?
Definitely not. Each lender decides the conditions under which he lends his money. Therefore, despite exceeding the threshold indicated, it is possible to obtain loans.
Of course, when a lender is going to put your capital at risk, the most frequent thing is that before you carry out an economic feasibility study. If the person requesting the loan is close to his debt limit, he is likely to be denied the loan. In these cases, you will only have to look for alternative lenders. In Good Credit Loans you can make simultaneous applications, so you will have more options for a yes.