Consumers may hear about debt/equity ratio or indebtedness ratio, and this immediately casts doubt in their minds or slows their desire to apply for a car loan. In fact, the debt ratio is simply a financial indicator to better understand your financial status.

The used car loan at Mirabel near Laval and Montreal offers a great opportunity when the time comes to review your credit report. AutoStudio 72's used vehicle financing at the best interest rate is provided by a team of experts who understand each customer's situation.

What is Debt Ratio?

We often hear that if a debt ratio is too high, one will immediately be considered a bad customer and no borrowing opportunities will be available. The debt ratio must first be explained before this question can be answered.

Car and other lenders use the debt ratio to determine whether or not you are able to make your monthly payments. To do so, they will add up all your sources of income (work, pensions, investments, rent, miscellaneous services and others). Then the sum of your regular recurring payments will be divided by your income. These include your car payment, rent, mortgage, municipal and school taxes, credit cards, loan, lines of credit and others. The result of this division will give your ratio.

In this calculation, grocery, restaurant, telephone/Internet and electricity expenses will not be counted. Let's look at an example to better illustrate a family's debt ratio. Let’s say you are self-employed in computer sales and your spouse is a salesperson in a department store. You have a total income (before taxes) of $3,800 and monthly payments of $1,250. Your debt ratio will be 32.9%, or 1250/3800.

What would be a good ratio?

Here is a chart that is often used by lenders to analyze the debt ratio:

- 0 to 30% Excellent

- 30.1 to 36% Good

- 36.1 to 40% Medium or at risk

- More than 40% Bad or dangerous.

In the previous example, your debt ratio is good at 32.9%. Lenders and financial institutions will trust you when you apply for a loan.

What happens if my ratio is higher than the desired standard?

Here is good news if you want to finance a vehicle. For many years, AutoStudio 72 has been specializing in 2nd and 3rd chance credit loans and ensures that you will get the loan you need for your next used vehicle.

AutoStudio 72 Has the Solution 

For each financing request, we take the time to analyze the consumer's debt ratio, but we also perform a more detailed analysis of his or her file before making a formal request to financial institutions. This work allows us to pre-qualify you for a car loan with clearly advantageous interest rates, without affecting your credit.

The debt ratio is considered an important indicator to assess your ability to pay. At AutoStudio 72 in Mirabel, near Laval and only a few minutes from Montreal, we are able to provide you with the loan you need for your used vehicle. Have a debt ratio greater than 40%? AutoStudio 72 can provide you with the loan you need.

In short, our experts not only look at the debt ratio indicator to give you a loan, they go much further by establishing your needs based on your ability to pay, reviewing certain data from your personal budget and giving you advice to help improve your financial situation. Thanks to the guidance of our experts in 2nd and 3rd chance home credit financing, we are able to understand your situation, explain it to financial institutions and qualify you for your car loan. As we have been in business for decades, we know how to help people who have experienced a difficult financial situation.

At AutoStudio 72 in Mirabel, we have all the financial tools at our disposal to establish your financial profile, help you make the right choices and help reduce your debt ratio. By making an appointment now with our local advisors, you will finally realize that the debt ratio is not such a big concern. We are able to guide you in your choices and allow you to drive the used vehicle of your dreams. Come and discover our vast inventory of used vehicles in Mirabel, near the Laurentians, Laval and Montreal.