Loans and leasing

What is the income to expenses ratio?

The income to expense ratio refers to the proportion of monthly income that is used to repay credit liabilities. If the monthly income is 700 EUR, but the loan payments are 70 EUR, then the income-expense ratio is 10%. If the loan payments will be 210 EUR, then the income-expense ratio will be 30%. In accordance with the recommendations of the Consumer Rights Protection Center on responsible lending, the bank assesses the total amount of a person's indebtedness (loans, leasing) and that it does not exceed the allowable amount. The bank also considers that after payments of existing credit liabilities, a person's income should not be less than the subsistence minimum set by the state.

The freer funds, the greater the amount a person can borrow. However, as a rule, banks do not lend if more than 40% per month of monthly income must be used to repay debts. The lower the income, the smaller part of it can be used to cover loan payments.

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