We often hear about this famous debt ratio of 33% not to be exceeded when applying for a car loan. But you must know that this rate is not immutable!
Each file is studied on a case-by-case basis, and some people may be granted a much higher debt ratio, or, conversely, a rate of only 25% may be refused! So how? What are the most common practices regarding this sacred debt ratio not to be exceeded if one wants to take out a car loan?
The bank studies each file
When a person wishes to take out a car loan with a bank or a credit institution, it automatically thinks that their monthly debt ratio should not exceed 33% to be granted the loan.
Except that in reality, the lenders are not limited to this indicator. Indeed, each request is carefully studied on a case by case basis. Many parameters are also taken into account:
- the personal contribution . If the Borrower has a certain amount of money to reduce the amount of the credit requested, it will work in his favor.
- income and wages . This is obviously the essential element of a car loan application. Everything will be calculated from these monthly revenues to determine the borrowing capacity.
- bank account management . If the Borrower has a “healthy” account, the bank will be much calmer by studying its record and therefore more favorable to grant the request, or even to raise the debt ratio. On the other hand, if the bank account includes incidents such as overdraft (even authorized), agios, forbidden, … the loan agreement may be compromised, or the debt ratio revised downward.
- the ability to save . The fact that the applicant has savings (even if he does not want to use it for the purchase of the car) is very reassuring for the lender: this indicates that the monthly charges are perfectly well managed and the monthly payments a credit will therefore be more easily honored.
- the rest to live . The bank will calculate what will remain to live every month after deducting charges and monthly payments. This remaining budget will be very important for day-to-day household management, especially if the Borrower has children or dependents.
- the profile of the applicant . Finally, another criterion will be taken into account for the debt ratio, it is the profile of the person, in particular: his age, his professional situation, his professional seniority, his state of mind, his projects … By For example, a young permanent employee with career development projects could be granted a higher debt ratio than a pre-retiree, even if the latter is a company manager.
The debt ratio is only one indicator
The famous debt ratio of 33% is only an indicator , and depending on the situation of the applicant, this rate can very well be revised upwards or downwards. In the case of very high incomes for example, the debt ratio can go up to 50%!
If the bank finds that savings capacity is important and that the rest to live is substantial, it will not hesitate to grant such a high debt ratio.
On the other hand, if the plaintiff receives a very high salary, but has a higher lifestyle than he earns and finds himself regularly in the open, he has no savings capacity , that it has debts, even prohibitions bank, its rate of indebtedness, if the credit car is granted, will necessarily be below the 33%!
Let’s take another case: a couple with children earns a very modest living, but has a banking behavior exemplary for years, a capacity for regular savings, and a comfortable living space, then the debt ratio that will be granted for his auto loan will likely be higher than the allowed rate.
The debt ratio of 33% is therefore only a basic indicator for auto credit applications, and each bank and lending agency will study and personalize the files to see if it will stick to this rate. authorized, or if it will be able to raise it, or on the contrary lower it.
It is for this reason that the applicant for a car loan should not be satisfied with a single opinion and must perform several simulations with several organizations to find the best offer that will best meet his expectations. .