Debt To Income / Element 5_Max Total Loan Payments Based Upon Your Total Income

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Element #5. Debt-To-Income (DIR) Element #5. Debt-To-Income (DIR)

DEBT-TO-INCOME (DIR)
ELEMENT #5

Debt-To-Income (DIR) is the Total Amount of All Your Current Payments (excluding living expenses such as food, utilities, gasoline, insurance, etc.) compared to the Total Gross Monthly Income shown/used on your Car Loan Application for All Applicants BEFORE Any Deductions. This Element will ALSO INCLUDE THE CAR LOAN PAYMENT ASSOCIATED WITH THIS VEHICLE PURCHASE. To determine this amount, you will complete Three Functions in this area. They are:

1) Calculate your Total Current Monthly Payments
2) Calculate your Maximum Debt-To-Income Amount
3) Analyze the Results

(Note: A Function 4) Maximum Approvable/Allowable Car Loan Payment may be Required in some cases. A detailed Explination is provided Below.)

1) CALCULATE YOUR TOTAL CURRENT MONTHLY PAYMENTS

Simply, Total Up All of Your Current Monthly:     (click: "Helpful Work Sheet")

    a) Loan Payments (i.e. un-secured signature loans, credit cards, home equity loans, etc.)
    b) House or Rent Payment(s)
    c) Alimony &/or Child Support Payments (if applicable)
    d) Legal &/or Forced Payroll Garnishments (if applicable)
    e) Your new Car Loan Payment

2) CALCULATING YOUR MAXIMUM DEBT-TO-INCOME AMOUNT

    Maximum Debt-To-Income (DIR) Percentage &/or Amount:     (click: "Helpful Work Sheet")

        ALL Credit Qualities and Lenders = 40% of Total Gross Monthly Income (NEW & USED Vehicles)
                                                                   (Shown/Used on Car Loan Application BEFORE Any Deductions)

            TOTAL GROSS MONTHLY INCOME X .40 = $MAXIMUM DEBT-TO-INCOME AMOUNT
            (NEW & USED Vehicles)

3) ANALYZE ELEMENT #5. DEBT-TO-INCOME (DIR) RESULTS

To Analyze the Results for "Element #5. Debt-To-Income (DIR)", Simply Compare the: (click: "Helpful Work Sheet")

TOTAL CURRENT MONTHLY PAYMENTS -VS- MAXIMUM DEBT-TO-INCOME (DIR) AMOUNT

IF your Total Current Monthly Payments (Including This Car Loan Payment) are LESS THAN your MAXIMUM DEBT-TO-INCOME (DIR) AMOUNT:

CONGRATULATIONS !
You Have Completed This Section.

Continue To The Next Section:

(Click) "HOW CAR DEALERS AND OTHER LOAN WEB SITES COST YOU MONEY"

- OR -

Go Directly To:

(Click) "STEP 2) DIRECT LENDER ACCESS"

IF your Total Current Monthly Payments (Including This Car Loan Payment) are MORE THAN your MAXIMUM DEBT-TO-INCOME (DIR) AMOUNT, calculate the following:

    4) MAXIMUM APPROVABLE/ALLOWABLE CAR LOAN PAYMENT

         $ MAXIMUM DEBT-TO-INCOME (DIR) AMOUNT

         - TOTAL CURRENT MONTHLY PAYMENTS

         $MAXIMUM APPROVABLE/ALLOWABLE CAR LOAN PAYMENT
         (i.e. All Based Upon your Total Gross Monthly Income and your Total Current Monthly Payments.)

    RETURN to the (click) "PAYMENT CALCULATOR"*. Decrease/Lower your TOTAL LOAN AMOUNT &/or
    Increase/Lengthen your LOAN TERM until the resulting Payment is LESS THAN OR EQUAL TO the MAXIMUM
    APPROVABLE/ALLOWABLE CAR LOAN PAYMENT (from Above).

        RECORD: NEW TOTAL LOAN AMOUNT $__________
                        MAXIMUM CAR LOAN PAYMENT $__________ (From Above)
                        TERM _____

    You now have THREE OPTIONS:

        a) Offer the Seller of the Vehicle THIS NEW TOTAL LOAN AMOUNT (Including Tax, Title, License and
             Documentation Fees) for the Purchase of the Vehicle.

                                        (NOTE: Disregard ALL Previous Offer/Purchase Price Amounts.)

        b) Make a Cash &/or Trade-In Down Payment that will REDUCE this New Total Loan Amount (Including Tax, Title,
             License and Documentation Fees) enough to Obtain the Maximum Approvable/Allowable Car Loan Payment.

             (i.e. The Payment Amount that allows you to meet ELEMENT #5. Maximum Debt-To-Income (DIR) Amount.)

        c) Choose a Similar &/or Different Vehicle with a Payment Amount that is LESS THAN OR EQUAL TO the Maximum
             Approvable/Allowable Car Loan Payment. (Note: If this Option is Chosen, the Similar &/or Different Vehicle
             must ALSO meet "Element #3. Loan-To-Value (LTV)" and "Element #4. Payment-To-Income (PTI)".)

IMPORTANT NOTICE
If One of the Above Options is Chosen Apply For
this NEW TOTAL LOAN AMOUNT.

CONGRATULATIONS ! You Have Now Completed This Section.

Continue To The Next Section:

(Click) "HOW CAR DEALERS AND OTHER LOAN WEB SITES COST YOU MONEY"

- OR -

Go Directly To:

(Click) "STEP 2) DIRECT LENDER ACCESS"

[Return To Element #4. Payment-To-Income] [Return To GET STARTED - STEP 1) Learning Center]

*Payment calculator provided by: Bankrate, Inc.