Borrowing Capacity Calculator

Calculate Borrowing Capacity (BC)



Formula

The formula to calculate the Borrowing Capacity (BC) is:

\[ BC = NI - E \]

Where:

What is Borrowing Capacity?

Borrowing Capacity refers to the amount of money an individual can borrow based on their monthly net income and monthly expenses. It represents the remaining income after all expenses are deducted, which can be used to repay borrowed funds. Understanding one's borrowing capacity is crucial for making informed financial decisions and avoiding excessive debt.

Example Calculation

Let's assume the following values:

Using the formula to calculate the Borrowing Capacity (BC):

\[ BC = 5,000 - 2,500 = 2,500 \]

The Borrowing Capacity is $2,500.