How to Know If You Need a Loan

When times are hard, you need to turn to a bank to bail you out and give you a loan. In todays economy, a loan might not be an option, since banks are not lending as much.

Difficulty: Easy

Instructions

Things You'll Need:

• ID
• if requested...tax returns

1. First figure our how much you are going to need. Calculate how much you owe on your credit cards. For example: $5000

2. Then calculate how much is the monthly payment you pay every month on the $5000 dept. So if you have a Macys card your monthly payment is $300 and a Citi card, monthly minimum is $200, it would be $400. Add the minimum monthly payment for each credit card, mine would be $700.00

3. How much do you want? If you want $5000.00, ask your bank how much of the loan amount will they include in your monthy liabilities.
   So for $5000....my bank adds 3%. This does not actually mean I'm going to pay this, this is just for the bank to calculate liablity.
   
   
   $5000 * 0.03 =$150...I will include this in my calculations.

4. Okay....$300+$200+$150+any monthly car payments($300)= $950.00
   We will use this figure in a minute.

5. My monthly income is $3500 gross.
   
   3500/950=.27
   
   I would qualify for a $5000.00 loan to pay off my credit cards. Most banks want this number (.27) to be under .45
   
   If you have good credit and this calculation comes under 0.45 or 45%
   
   Then go ahead and apply for the loan, because most likely the banks will lend to you.