Why bank refuses your loan application?

23 / 11 / 2023When you apply for a loan, the bank takes into account various factors, including your credit history, solvency and debt load index. One of the important indicators is the debt load.

What is a Debt Load?
This is the ratio of average monthly loan payments to your average monthly income. For example, if your income is 5 mln. sums, and the monthly loan payment is 4 mln. sums, your debt burden will be 80%.

Why is it Important?
Banks use this indicator to assess risks. The higher the debt load, the higher the likelihood of difficulties repaying the loan.

It is established by law that the debt burden should not exceed 50%. However, for mortgages, car loans and consumer loans, different rules may be established based on the internal policies of the bank.

Bear in mind that proper management of your finances is a simple and wise solution for successfully obtaining a loan.