Question: One easy way to figure out if getting a loan will be a problem: Take > your current copy of your credit report and take the total installment > payments plus the revolving payments and if it is more than 45% of > your take home, they will wonder how you are going to make the > payment. You can’t figure in capital gains (like your sale of a > business) unless you can prove that the gains are recurring so forget > about including that income. I asked if this was for rental or resale > because you could go to a commercial lender instead of a consumer > lender. Commercial lenders are being asked to create volume all the > time and would jump at the opportunity to give you a loan. I would > assume you could get a $4,000 loan fixed at 4-5% for 1 year with full > amort which comes to $342 per month. If you have a questionable > history with that bank, move on. Start fresh with a new lender. Make > sure you look like someone people want to give loans to also.
Answer: I looked at your situation and with take home income of ~$1280 per month you are already stretched pretty thin with the $488 in non-revolving debt (home and car) I assume with a balance of $1600 on your card the minimum payment is around $40. That gives you about $48 per month in room for more debt. Now I see why they won’t loan this money to you. It’s risky from their standpoint. They figure that if 45% of your take home goes to debt, the remaining 55% will go towards eating, entertainment, clothes, gas, etc.. And since this rule has developed over time, it is fairly accurate. Just because a lender will loan up to 45% of your take home doesnt mean you should do it though. I recommend about 25% so you can save some of that money for retirement. The main source of your problem is that you earn approx $20k per year. It’s not giving you enough room to move. If increasing your income isn’t an option, pay off that credit card first, then the car. Start saving 5% of your take home at a minimum and hold at least 3 months of expenses in a savings account or CD at the bank you want to stick with. The bank can’t help but love you after all that. Plus, the CD can be used for collateral next time you get in a crunch like this. Banks love risk free collateral.
Related posts:
- Easiest way to pay for a new roof
- Personal Loan to pay off Credit Cards?
- Pay off 15.9% CC with 12.9% loan – worth it?
- Pay Off Mortgage Early?
- Putting off roof repair.
- Pay off debt ?
- Pre-approved home loan OK? Was “Help me buy hpuse”
- Looking for Tip to Pay Off Cr Crd
- Does credit card balance affect credit ratings?
- Borrowing question
- Giant expensive homes everywhere
- Need a way out!