They said I need to get it down to 20% I just dont get what they mean. Any help?
2007-01-11 17:01:44 · 6 answers · asked by DJ C 4 in Business & Finance ➔ Personal Finance
"Unsecured loans are loans that are not guaranteed with any asset (house, car), so that the risk of repossession does not exist. Though the lender can still take legal action in order to recover the money, such a legal process would be significantly longer and more expensive than with secured loans.
Typical unsecured loans are credit card debt, bank overdrafts, and personal loans."
Now the lender is probably analyizing your income & debt. He feels you are (should be) spending 48% of your income on current unsecured debt, and is hesitant to lend you any money until your unsecured debt is just 20% of your income.
2007-01-11 17:23:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
They're calculating your debt to income/assets ratio. 20% is a general rule of thumb. In other words, lenders typically want your debt to be 20% or less, if any at all, of your annual income.
Let's say you earn $40,000 a year. This would mean you should have no more than $8,000 in debt.
Unsecured debt typically includes outstanding credit card balances or any other type of revolving credit such as is commonplace with retail stores.
Secured debt (which seems not to be the case in your particular situation) typically includes automobiles, homes and perhaps certain financial holdings such as stocks, bonds or other securities.
2007-01-12 01:29:30 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Unsecured debt is a financial term that refers to any type of debt that is not collateralized by any specified assets in the event of default.
If you have a car loan, the car is collateral. If you default on the loan the bank can take the car and recoup its money. If you buy a bunch of crap on your AMEX card its not collateral, the bank cant come and take your night on the town back....
2007-01-12 01:11:28 · answer #3 · answered by furyguy 2 · 0⤊ 0⤋
48% of your debt has nothing to secure it. for example if you buy a house or have a cosigner its a secured loan cause they can always get the backup person to pay or take your house. if its just your credit cards then its unsecured.
2007-01-12 01:04:59 · answer #4 · answered by anonymous 6 · 0⤊ 0⤋
credit card payments? Car Loan? Student Loans????
Whjat they mean is say you make 10,000 a year most lenders require that you have to have at least half of your money easily available (savngs accounts whatever) before a loan can even be considered. 48% is 4,800 leaving 5,200 a year. How can you live on $5,200 a year (I couldn't) tahts why you were turned down.
2007-01-12 01:07:33 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I could be wrong but I think that means that you don't have enough collateral to cover your debt in case you default.
2007-01-12 01:06:40 · answer #6 · answered by gollybegully 2 · 0⤊ 0⤋