PAYMENT-TO-INCOME (PTI)
ELEMENT #4

Payment-To-Income is the Maximum Amount your Car Loan Payment can be based upon Your Total Gross Monthly Income. (i.e. Based on the TOTAL INCOME shown/used on your Car Loan Application for ALL Applicants BEFORE any Deductions.)

To determine this amount, you will perform Four Functions in this area.

1) Calculate your Total Gross Monthly Income Amount.
2) Calculate your Maximum Payment-To-Income Amount.
3) Calculate your Car Loan Payment Amount.
4) Analyze the Results.

1) CALCULATING YOUR TOTAL GROSS MONTHLY INCOME AMOUNT

Calculating your Total Gross Monthly Income correctly is Very Important. To eliminate mistakes and errors, calculate Each Source of Income using a Separate Gross Income Work Sheet (from Below).

Gross Income Examples and Work Sheets
(Use One Work Sheet per Income Source)

Hint: Individuals with Non-Consistant Overtime &/or with Periodic Bonuses should use the "Alternative Method" to Calculate their Gross Income Amount.

Hourly Employees Without Overtime     (click "Helpful Work Sheet")

Hourly Rate X Hours Worked per Week = $Amount X 52 Weeks per Year = $Amount ^./. 12 Months per Year

                                                              = $GROSS INCOME AMOUNT


Hourly Employees With Overtime     (click "Helpful Work Sheet")

Hourly Rate X 40 Hours Worked per Week = $Amount X 52 Weeks per Year

                                                                   = $Amount ^./. 52 Weeks per Year

                                                                   = $Base Gross Income

Hourly Rate X 1.5 = Overtime Hourly Rate X Hours of Overtime per Week

                            = $Amount X 52 Weeks per Year

                            = $Amount ^./. 12 Months per Year

                            = $Overtime Gross Income

Base Gross Income + Overtime Gross Income = $GROSS INCOME AMOUNT


Salary Employees     (click "Helpful Work Sheet")

Annual Salary ^./. 12 Months per Year = $GROSS INCOME AMOUNT


Set/Fixed Income Amounts (i.e. Alimony, Child Support, etc.)     (click "Helpful Work Sheet")

IF Received Weekly:

Amount Received X 52 Weeks per Year = $Amount ^./. 12 Months per Year = $GROSS INCOME AMOUNT

IF Received Every Other Week:

Amount Received X 26 Periods per Year = $Amount ^./. 12 Months per Year = $GROSS INCOME AMOUNT

IF Received Twice Per Month:

Amount Received X 24 Periods per Year = $Amount ^./. 12 Months per Year = $GROSS INCOME AMOUNT


Alternative Method     (click "Helpful Work Sheet")

Using a Recent Pay Stub:

Gross Pay Year-To-Date ^./. Number of Pay Periods Year-To-Date = $GROSS INCOME AMOUNT

Hints:

• Gross Pay Year-To-Date -- Is your Total Income BEFORE Any Deductions.
• Number of Pay Periods Year-To-Date -- The Number of Checks you have received this year INCLUDING this Check.

Not Sure How Many Checks You Have Received, Simply Divide:        

Gross Pay Year-To-Date Divided By the Number of Months using the Check's Pay Period Ending Date (i.e. Not the Date of the Check.).

Hint: July 16, 2008 is Six & One Half Months (Not 7 1/2 Months).

(EXAMPLE: Gross Pay Year-To-Date ^./. Number of Months = $GROSS INCOME AMOUNT)

To calculate your TOTAL GROSS MONTHLY INCOME AMOUNT:     (Click "Helpful Work Sheet")

• If the Applicant and Co-Applicant/Co-Signer are MARRIED TO EACH OTHER, COMBINE both individual's Total Gross Monthly Income Amounts to obtain One Overall Dollar Amount. Use this combined Total Gross Monthly Income Amount to calculate your Maximum Payment-To-Income (PTI) Amount in the next function.

IMPORTANT NOTICE: Combining the Total Gross Monthly Income from Each Source of Income &/or for Applicants Who Are Married to each other is for USE when calculating your Maximum Payment-To-Income Amount ONLY. The purpose of this tutorial is to Assist You in Obtaining an Automatic Car Loan Approval. Therefore, DO NOT combine the amounts from each source of income when filling out a Car Loan Application. Simply, enter Each Income Source Amount in the appropriate area of the application.

3) CALCULATING YOUR CAR LOAN PAYMENT AMOUNT

Calculating your Car Loan Payment is Very Simple. Follow the "link" provided below. Input the Vehicle Price as:

    1) The Maximum Loan-To-Value (LTV) Amount.

    - OR -

    2) The Total Amount You Need to Borrow (Including: Tax, Title, Licensing and Documentation Fees) if the Amount is
        LESS THAN the Maximum Loan-To-Value (LTV) Amount.

The Car Loan Calculator will provide you with Payment Amounts for 24 months (2 years), 36 months (3 years), 48 months (4 years), 60 months (5 years) and 72 months (6 years) Loan Terms/Periods.

Use the following Interest Rate(s) in your Calculation:     (Note: Individual Interest Rates Will Vary.)

    a) Good Credit Quality/Lenders
            New Vehicles = 7.50%
            Used Vehicles = 10.00%

    b) Less than Perfect to Bad and No Credit Quality/Lenders
            New Vehicles = 15.00%
            Used Vehicles = 21.00%

The above Interest Rates are designed to provide you with a "High-End" Car Loan Payment Estimate. The Interest Rate Offered/Granted by your Lender May Be Lower or Higher in some States. You may Input Any Interest Rate you choose to Compare Car Loan Payment Results.

Use the following Loan Term in your Calculation:

    a) New Vehicles & All Credit Quality/Lenders -- Up To 72 Months (i.e. 6 Years)

    b) Used Vehicles & All Credit Quality/Lenders:

            Vehicles Under 50,000 Miles -- Up To 72 Months (i.e. 6 Years)

            Vehicles Over 50,000 Miles -- Up To 48 Months (i.e. 4 Years)

IMPORTANT NOTICE

YOU MUST "PRINT" OR "WRITE DOWN" THE "CAR LOAN PAYMENT AMOUNT". THE CAR LOAN PAYMENT AMOUNT IS 
NEEDED TO CALCULATE YOUR MAXIMUM PAYMENT-TO-INCOME (PTI) AMOUNT AND YOUR MAXIMUM DEBT-TO-
INCOME (DIR) AMOUNT.

Click: "PAYMENT CALCULATOR & Helpful Work Sheet"*

CAR LOAN PAYMENT AMOUNT  -VS-  MAXIMUM PAYMENT-TO-INCOME (PTI) AMOUNT

CONTINUE TO: (Click) ELEMENT #5. DEBT-TO-INCOME (DIR)

RETURN to the (click) "PAYMENT CALCULATOR"*. Decrease your TOTAL LOAN AMOUNT &/or Lenghten the LOAN TERM until the CAR LOAN PAYMENT is LESS THAN or EQUAL TO the MAXIMUM PAYMENT-TO-INCOME (PTI) AMOUNT (from Above).

RECORD: TOTAL LOAN AMOUNT $__________     NEW PAYMENT $__________     TERM _____

You now have THREE OPTIONS:

• Offer the Seller of the Vehicle the TOTAL LOAN AMOUNT (from Above) as the Total Purchase Price of the Vehicle. Complete a Credit Application using the Total Loan Amount as the Amount of your Car Loan.

NOW CONTINUE TO: (Click) ELEMENT #5. DEBT-TO-INCOME (DIR)