Debt burden ratio (DBR) is one of the key indicators by which banks and microfinance organizations (MFOs) in Kazakhstan determine financial condition of a borrower and decide whether to approve or deny a loan, DKNews.kz reports.
For creditors DBR is a way to determine how realistically a person is able to cope with his debt obligations. The higher this indicator, the higher the risk that clients will not be able to repay debts on time. Accordingly, the lower the likelihood that a bank or an MFO will approve a new loan.
How is the ratio calculated?
In order to calculate the DBR, it is necessary to divide monthly loan payments by an average monthly income of the client.
The calculation includes all mandatory payments: mortgages, car loans, consumer loans, microloans, even credit card limits – regardless of whether they were used or not. In this case, income for the last 6 months is considered and includes official and documented receipts (salary, pension, income of individual entrepreneurs, etc.).
What is the DBR value set in connection with the obligation?
Maximum DBR value for citizens who take out loans from banks and MFOs is 0.5, that is, the monthly payment must not exceed a half of the client's monthly income.
What is a danger of a high credit load?
Too high DBR can cause a refusal to issue new loans, higher interest rates, delays and a worsening credit history, as well as the risk of falling into a debt hole.
Knowing how the DBR is calculated, you can prepare in advance for submission of loan applications and predict decision of the financial institution.
