Bankers are notoriously stingy. Remember applying for your first car loan, and the banker in the polyester suit telling what you can afford versus what you desired? BMW versus a Ford?
He or she was basing that yes-or-no decision on your back-end ratio. No, that is not the size of your butt compared to your waist. A back-end ratio is just a calculation to show how much dough you have left from your current income after paying your current bills. Most banker boys (or girls) call it a debt-to-income ratio.
Related or Semi-related Video
Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
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