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What is the relation between debt-to-income ratio and personal loan?
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Debt-to-Income ratio (DTI) is an important aspect of personal finance that directly impacts your ability to secure a personal loan. It is a financial metric that measures the proportion of your total monthly debt payments to your monthly income. Lenders use this ratio as a crucial factor to evaluate your creditworthiness and assess your ability to manage additional debt, such as a personal loan.
Calculating your DTI is quite straightforward. Simply add up all your monthly debt obligations, including existing loan EMIs, credit card dues, and any other fixed monthly payments, and divide it by your total monthly income. The resulting percentage is your DTI. Now, what is important to understand is, how your DTI impacts your personal loan application. Let’s dive right into it.
The impact of DTI on personal loan eligibility
How to improve your DTI for a personal loan application
If your DTI is on the higher side, there are several steps you can take to improve it and enhance your chances of obtaining a personal loan on favourable terms:
Read More - पर्सनल लोन ₹6 लाख
Wrapping up
Your debt-to-income ratio is a crucial factor when it comes to obtaining a instant personal loan. Lenders use this metric to assess your financial stability, loan eligibility, and interest rates. By maintaining a healthy DTI and implementing the tips mentioned above, you can increase your chances of obtaining a personal loan with a competitive interest rate and repayment terms that suit your financial situation.
Remember, responsible borrowing and diligent management of your debts are the keys to achieving your financial goals. So, calculate your DTI, explore your personal loan options, and take the next step towards fulfilling your dreams!
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