FOIR (Fixed Obligations to Income Ratio)
Definition
The share of your income already committed to existing EMIs and obligations; many lenders decline a new loan when it exceeds about 50%.FOIR, or Fixed Obligations to Income Ratio, measures how much of your income is already committed to fixed obligations such as existing EMIs. Lenders use it to judge whether you can afford another loan: if your existing commitments take up too large a share of your income, a new EMI may be unaffordable. Many lenders decline applications when FOIR exceeds roughly 50%. Reducing existing EMIs or borrowing a smaller amount lowers your FOIR and improves your chances.
Related guides
Related terms
- CIBIL Score — A 3-digit credit score from 300 to 900 issued by TransUnion CIBIL that summarises an individual's credit history.
- EMI (Equated Monthly Instalment) — A fixed monthly payment that repays a loan's principal and interest over its tenure.
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