What is ‘Inflexible expense’
Inflexible expense is one that cannot be adjusted or eliminated by the company or a private individual.
Breaking down the ‘Inflexible expense’
Inflexible expense is constant mandatory payment or debt. Most likely it is a fixed payment amount, whose thread is unchanged. For a single, typical inflexible expense will be the mortgage or loan for a car, child support or alimony, which have a fixed repayment schedule, amount and date. For companies, interest payments and wages of employees will be inflexible costs. A flexible expense is one that is easy to change or avoid. Flexible expenses are costs that can be adjusted in size or eliminated by the user. In personal Finance, flexible expense are costs that are easily changed, reduced or eliminated. For example, entertainment and clothing are flexible expenses. Even necessary expenses like food, can be considered flexible because the amount spent is regulated by the consumer.
The costs of lending criteria
Inflexible expenses are one of several criteria considered by lenders in granting consumer credit, mortgage loans or car loans. Personal loans are not secured by collateral, unlike a mortgage or car loan, so the selection criteria are stricter. Lenders typically look at five criteria to evaluate personal loan applications credit score; current income; employment history and annuity. Credit check shows the applicant credit score. Credit score can be improved by the repayment of the debt and increasing credit card limits. How to increase the utilization of the loan, which is the amount of debt to credit limit, and can be up to 30 percent of the credit score.
Creditors carefully examine the existing sources of income and monthly expenses. Even if the applicant has a high income, lenders measure debt by assessing the amount of credit card, and inflexible costs. Debt-to-income (HPH) is equal to the total monthly debt payments divided by gross monthly income. For example, a borrower with $6000 in monthly income of up to $2,000 in monthly debt payments, has a DTI ratio of 33 percent. Lenders look for a DTI ratio of no more than 43 percent, which is the maximum mortgage lenders will allow applicants. Lenders require established proof of steady income and employment stability. Self-employed applicants will be subject to more scrutiny. Equated monthly installment (EMI), which indicates the amount of the loan payment to pay off a mortgage or other loan on time. The borrower of the amount of EMI depends on interest rate and loan terms. Lenders also check the credit history and the repayment of the loan. Unpaid debts can affect your credit score for up to seven years, which can reduce your score and limit your ability to obtain a loan.