Understanding DTI and Impact on Auto Loan...

Anonymous — Fri, 04 Nov 2011 15:13:26 GMT

Hi all,

First time posting so please bear with me.

Recently I've been contemplating buying a new (to me) car and was looking at the DTI as I understand it to be a very important factor. Below are my "specss

- Income: $80k/year with 8%minimum bonus (I'm closer to 12-15% generally)

- Debt: $13k for student loans at $217/month; $18k for current auto loan, $385/month

- Mortgage (Rental Property): $1300

- Rental Income: $1300

- Rent (Primary Res): $1200

- Credit Score: not 100% sure but average currently would be my assumption

From using a bit of math I believe my DTI is roughly 37/40 using $80k base plus $11,700 rental income (at 0.75%), with monthly debt of $2,717. 37/35'ish if I were to get rid of the vehicle I have the loan on.

First of all, did I calculate that correctly? If I didn't have my rental I'd be looking at 18/27 by the same marks (18/21 if i were to sell the car I own with the debt). I assume from research that the rental mortgage SHOULD be included in both the front and back ratios as well?

So here is my question. Before I buy a new car I will look to sell the car I own with the debt above so I will only have $217 in debt monthly (non-housing). I have a second, payed off commuter I can kick around in until whenever.The car I'm looking at will cost anywhere from $45k-50 and I will put anywhere from $10-15 down on it so lets say a target loan amount of $35k over 5 years a 5.5%.

Do the numbers look "ok?" Is there anything else that I can do or consider that I'm not taking into account?

Thanks!

Re: Understanding DTI and Impact on Auto Loan...

Anonymous — Mon, 07 Nov 2011 13:39:34 GMT

With your income, as long as you are under 50% DTI, you should be fine. Your calculations look fine as well. I do believe auto lenders look at rental income at 100% as long as you can provide the support if necessary, a little different from mortgage lenders.

Good luck.

topic Understanding DTI and Impact on Auto Loan... in Auto Loans

Understanding DTI and Impact on Auto Loan...

Re: Understanding DTI and Impact on Auto Loan...