What is total debt service ratio in SAP CRM-IFS - Financial Services?

SAP Term: total debt service ratio

• Component: CRM-IFS

• Component Name: Financial Services

• Description: A key figure that financial lenders use to give a preliminary assessment of whether a potential borrower is already in too much debt. The ratio shows the proportion of income that is already spent on outgoing payments.

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• Key Concepts: 
  Total Debt Service Ratio (TDSR) is a financial metric used to measure an individual’s ability to manage their debt. It is calculated by dividing the total amount of debt payments (including mortgage payments, credit card payments, and other loan payments) by the individual’s gross monthly income. The higher the ratio, the more debt an individual has relative to their income. 
  
  How to use it: 
  In SAP CRM-IFS Financial Services, TDSR is used to assess an individual’s creditworthiness. It is used to determine whether or not an individual can afford to take on additional debt and if they are likely to default on their existing debt. TDSR is also used to determine the maximum amount of loan that can be approved for an individual. 
  
  Tips & Tricks: 
  When calculating TDSR, it is important to include all of an individual’s debt payments, including those that are not related to mortgages or loans. This includes payments for car loans, student loans, and other types of debt. Additionally, it is important to use the individual’s gross monthly income when calculating TDSR, as this will provide a more accurate assessment of their ability to manage their debt. 
  
  Related Information: 
  TDSR is just one of many financial metrics used by SAP CRM-IFS Financial Services. Other metrics include Debt-to-Income Ratio (DTI), Credit Utilization Ratio (CUR), and Credit Score. All of these metrics are used together to assess an individual’s creditworthiness and determine whether or not they are eligible for a loan.