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# Answer to Question #142714 in Finance for sisi

Question #142714
Louise is considering if she can afford a new personal loan for taking a vacation in Europe. Currently, Gisele works as a marketing manager in an advertising agency, earning a gross income of $40,000 per month. Her employer withholds a total of$2,000 for retirement contributions from her monthly pay.
Each month, she also has to pay 4,200 for credit card debts, $3,500 for personal debts and$2,500 for her education loan.
The new installment loan she needs for the European holidays will cost an additional
\$4,000 per month.
What is Louise’s current debt payments-to-income ratio? Suggest if Louise can afford
the installment loan for her European trip or not.
1
2020-11-09T09:51:03-0500

Total debts"=2000+4200+3500+2500+4000"

"=16200"

Debt payment to income ratio"=\\frac{16200}{40000}"

"=0.4"

From this ratio it indicates that Louise has credit worthiness therefore she can afford the installment loan for her European loan

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