Your debt-to-income ratio is an important factor when applying for a car refinance loan.
(DTI) Debt-to-Income Ratio Calculator
What is a Debt-to-Income Ratio?
The debt-to-income ratio, also known as DTI, is a measurement of your monthly debt obligations compared to your gross monthly income.
A higher DTI means more of your income is going toward paying monthly debt.
How to Calculate Your Debt-to-Income Ratio
First, you’ll need to know the amount of your monthly debt payments and add them up. This includes:
- Mortgage or rent
- Alimony or child support
- Car loan payments
- Personal loans
- Credit cards
- Student loans
Then, divide the sum of your monthly payments by your gross monthly income to get your DTI.
What’s a Good DTI for a Car Refinance Loan?
While mortgage lenders prefer a debt-to-income ratio below 36%, many auto refinance lenders have a maximum of 50% — others don’t have a maximum at all.
A good rule of thumb is to keep your DTI below 50% to increase your odds of getting approved for a car refinance loan. However, there are other factors that lenders consider, like your credit score, loan-to-value (LTV), vehicle age, and more.