Did you know that you can give yourself an advantage with getting a car loan by determining your PTI, before applying at a dealership? Many people assume this only has to do with their credit, but lenders also consider your debt-to-income (DTI) ratio and payment-to-income (PTI) ratio as well. Luckily for you, we here at Bad-Credit-AutoLoans.net can provide you with the necessary smart car finder auto news about financing and cheap car sales in your area.
A PTI is one form of DTI and is more commonly known as "front-end-ratio", or how much of your gross income is placed towards the cost of a house or vehicle, which can include insurance, car payments, mortgage, etc.
How Your PTI Helps with Auto Financing
We all know that being able to receive a cheap car loan is possible for almost anyone, even if you have poor credit. The reason this is has a lot to do with people's PTI and there ability to show a lender that their current monthly gross income supersedes their monthly amount of debt. Also, as an applicant you only have to make sure that you're car insurance and vehicle payments do no absorb more than 15% of your income, and you will be able to easily qualify for easy auto financing for cheap new or used cars at any local dealership.
How to Calculate Your DTI at Home
You can figure out your payment-to-income ratio for bad credit auto loans with ease before ever visiting a car lot. All you have to do is add up the following:
All your monthly payments (student loans, credit cards, child support, etc.)
Mortgage or rent
All utility payments
Once you have this all added together you simply take your gross monthly income and divide it against your entire monthly payments. This will give you your debt to income ratio, and a good idea of whether you can afford auto financing.
You also want to remember that along with a good payment-to-income ratio you want to have a good credit score, or at least place some money down to get approved for a car loan. Neither of these things is 100% necessary, but depending on how low your credit score is it could go a very long way to hearing the answer you want from a lender.