How do I calculate the debt-to-income ratio for my car loan?

I've read that the debt-to-income ratio is important for getting a car loan, provided it stays at 43% or less. How do I calculate my debt-to-income ratio?

The debt-to-income ratio is a major factor in car loan approval because it helps determine your risk for defaulting on the car loan. It’s surprisingly simple to calculate.
To figure out your debt-to-income ratio:
  • Add up all of your monthly debt payments (this is the minimum monthly payment for credit cards)
  • Add together all of your pre-tax income
  • Divide the debt by the income to get your debt-to-income ratio
  • Multiply this by 100 to get a percentage
For example, let’s say your debt is $2,200 a month and your pre-tax income is $7,000 per month. Your debt-to-income ratio would be $2,200/$7,000 = .314 or 31.4%. If you’re getting a car loan and you have strong credit and steady income, this ratio would almost certainly net you a car loan.
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Eric Schad
Answered on Nov 24, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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