Question

Owen makes $3,000 per month. He spends $300 on credit card payments and $350 on an auto loan. What is his debt- to-income ratio?

Answer 1

So the ratio is debt-to-income of 13:60

Explanation:

Assumption: The credit card and auto loan figures given are per month.

Total outgoings for 1 month: `$300+$350 = $650`

Write debt-to-income ratio as;-

outgoings : income`" "->("outgoings")/("income") = ($650)/($3000)`

For simplifying this is treated in the same way you would a fraction.

`(650-:50)/(3000-:50) = 13/60`

13 is a prime number so we can not simplify any further.

So the ratio is debt-to-income of 13:60