Households that try to maintain a rate of consumption are sometimes forced to use consumer credit. This is mainly due to the lack of purchasing power, variations in income, and lack of savings. Therefore, one can say that the access to a consumer credit makes it possible to stabilize consumption and to support the budget.
Calculate the debt ratio
Before accessing a consumer credit, you must calculate your debt ratio. It indicates your borrowing capacity and expresses in percentage the difference between your cash inflows and outflows. By knowing your debt ratio, you can know the amount of money you can borrow.
Your income plays a big role in this calculation, because it must be calculated by adding your net wages, your profits, your rents received, your annuities and your pensions received, as well as social assistance and allowances. Once your income has been determined, you must ensure that the repayment of the monthly payments on your loans does not exceed one third of your income, that is to say, 33%.
The amount of fixed charges made up of your current credits, your pensions paid and your rents are also to be taken into account in the calculation. In short, you get your debt ratio by dividing your expenses by your income. You can calculate your debt ratio by making a free personalized simulation online on the websites of certain credit institutions.
Consumer credit helps stabilize consumption and support income
It should first be noted that there are ways to develop access to cheap consumer credit for households with lower incomes. Manual workers, temporary workers, and employees on fixed-term contracts have the advantage of benefiting from a certain flexibility in terms of granting consumer credit.
Consumer credit is a solution to help you get out of it because your income cannot always support your expenses. You can benefit from stable consumption by knowing what your debt ratio is. By calculating your debt ratio, you can better manage your income by knowing the amount that you must repay and the amount that must cover your consumption.