How Much Loan Can You Afford? (Simple Guide)

How Much Loan Can You Afford? (Simple Guide)

Introduction

Taking a loan without knowing what you can afford is one of the biggest financial mistakes.

What Determines Loan Affordability

  • Income
  • Expenses
  • Interest rate
  • Loan term

Example

A $20,000 loan at 6% over 5 years = manageable monthly payments.

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Tips

  • Keep payments under 30% of income
  • Avoid long-term high-interest loans

Conclusion

Always calculate before borrowing to avoid financial stress.

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