What is your debt ratio with a car loan?Is it within safe limits?The bank will analyze it for you
How far are you from finance?Twenty years ago, most people probably didn’t have a concept of the words market, economy and finance.Now that these concepts are becoming clearer, the perception has changed dramatically.For example, more people play financial management, funds.Another example is that people used to spend as much money as they could, but now they are willing to pay more interest on mortgages and cars to meet their immediate needs and resist the depreciation of their money.According to data from the Central bank in 2021 and the seventh census report, 500 million of China’s 1.4 billion people have consumer loans and mortgages.Excluding 250 million people aged 0-14 and 190 million over 65, these two groups have absolutely no ability to repay their debts.Our conservative estimate of the number of people in debt is 52.1%, so debt has become the norm.Debt ratio Debt meets our material needs in advance, which can help us improve our living standards and bring us economic pressure at the same time.Within the scope of the individual can bear, it will not affect our life too much.On the contrary, it will lead to capital chain fracture and even broken promises.So the debt ratio is generally in which range is reasonable, let’s take a look.The formula of debt ratio is as follows: total personal liabilities/total personal assets () 100 = personal debt ratio.The total liabilities here can be your expenses in a month, or your expenses in a year, depending on your needs, and the total assets and the debt ratio correspond over time.Generally speaking, banks tend to approve loans on a monthly basis.Since the debt ratio can be partial or whole, the calculation values vary greatly depending on the items involved. Let’s take one month as an example.For example, Mr. A’s monthly loan is 3,000 yuan, his monthly living expenses are 2,000 yuan, and his salary is 7,000 yuan. The debt ratio calculated is 71.43%.If only Mr. A’s loan is counted, the debt ratio is 42.86%.The debt ratio was increased by 28.57 per cent because of the inclusion of all living expenses.For most people, living expenses account for 20-30% of the total expenditure, and it is safer to keep the debt ratio below 75% when including living expenses.If you strip that out, the debt ratio should stay below 50%.We can generally understand their financial situation through the calculation of these two methods, and can also calculate the debt rate of credit cards, mortgages and car loans.On the one hand, the debt ratio can let us know our economic situation and remind us to use our capital wisely.On the other hand, it is an important indicator of whether banks are lending.Financial institutions do not accurately determine the amount of personal living expenses when examining whether a loan can be approved, so the second calculation method introduced earlier is used more often.In addition, each bank or financial institution has different requirements for debt ratio.Large banks have a low tolerance for bad debts and thus maintain a debt ratio of around 50 percent excluding living expenses, while small financial institutions have a debt ratio of around 60 percent and a high interest rate on loans.Second, the household balance sheet debt ratio is a calculation method, but it does not give a complete picture of our financial situation.By drawing up family balance sheets (also applicable to individuals) and understanding personal credit reports, we can sort out funds, understand property status from various aspects, maintain our “credit line”, and generate wealth in a virtuous cycle.The financial statement is the barometer of the asset situation, and the credit personnel can extract useful information from the statement through processing and sorting, thus providing important basis for the loan basis.We can learn from the form of financial statements and simplify it into family balance sheets to help us manage family funds well.Mr. Let’s look at an example, A family member has A wife and children, the family assets status: owns 200000 yuan in cash and demand deposits, housing loan balance of 700000 yuan, enterprise credit, fund, stock 70000 yuan, the real estate value 3.6 million yuan, automobile and home appliance original price 180000 yuan, depreciation is 6 to 70000 yuan, CheWeiFei 200000 yuan, the provident fund deposit of 50000 yuan.Annual income and expenditure of Mr. A’s family: annual income of 960,000 yuan after tax, pension account of 21,600 yuan.The annual expenditure is 72,000 yuan for food and living expenses, 60,000 yuan for education, 204,000 yuan for loan repayment, 48,000 yuan for transportation and communication, and 140,000 yuan for other expenses (including 20,000 yuan for working capital).According to the above data, we can conclude that the total assets of the family are 4.18 million yuan, liabilities are 0.7 million yuan and net assets are 3.48 million yuan.Annual income is 981,600 yuan, with a monthly average of 81,800 yuan; annual expenditure is 524,000 yuan, with a monthly average of 43,600 yuan.Next we calculate the ratio of these numbers.The asset-liability ratio of Mr. A’s family is 16.7%, which is within A reasonable range and relatively low, indicating that the financial leverage in the family is small, and the family can purchase insurance, invest or improve living standards by moderately increasing the leverage.The debt repayment ratio is equal to the monthly repayment amount divided by the monthly income. The ratio of Mr. A’s family is 14.66%, generally lower than 35% is A reasonable range. Therefore, Mr. A’s family has A good credit situation and basically has no repayment pressure.The reserve fund adequacy is equal to the realized assets divided by the monthly expenses, and the reasonable range is 3-6, that is, 3-6 times of the monthly necessary expenses.Mr. A’s family is 7.33, which can be appropriately lowered. Besides, the family income is high, so the petty fund can be adjusted to the lower line.Financial freedom is equal to annual financial income divided by annual expenses.A family’s annual income from financial management is 0, so its financial freedom is 0%, indicating that there is basically no investment in the family.Through the above analysis, we can see that the data can reflect our financial status in multiple dimensions.In fact, the analysis and calculation of family finances should be more rigorous and comprehensive than now.Three, summary because each individual or household balance sheets, the conclusion will be some discrepancy, but through the calculation of ratio, we can know the conditions of their assets, assess whether they can handle, through debt repayment rate, deposit enough degrees and a series of data, we can find out the defects in their capital structure.In addition, although the data of assets makes us clear at a glance, readers should also be reminded that we should attach importance to our own characteristics and develop property allocation plans that are in line with our own age, occupation, health and other factors.Learn to use yourself to the extent that you can afford to do so, but at the same time be vigilant and not greedy for short-term gain.