What is a Debt-to-Burden Ratio and what does it mean?

  • Debt to Burden Ratio (DRB) is the maximum amount of financing you can get as a percentage of your monthly income

Why does DBR exist?

  • The DBR was put into use by the Saudi Arabian central bank (SAMA) as a way to make sure that customers are not over burdening themselves and are not committing too much of their monthly income towards repaying debts.
  • SAMA has put a limit on how much of a customer’s monthly income may be used towards repayment of financing. This is 33%
  • Your DBR may vary depending on a combination of financing products that you take out. For example personal finance plus auto lease, credit cards and mortgage.

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How can DBR affect my ability to get financing?

  • All banks and financing institutions are required to obey SAMA guidelines about maximum finance amount
  • Banks are responsible to ensure that a customer does not receive financing of any type if his total debt will exceed the allowed DBR
  • Your DBR will mainly affect the size of financing that you will be eligible for. This means that the amount of financing you can get may increase or decrease depending on the available DBR.

How does DBR differ depending the type of financing I get? 

The allowed DBR differs depending on the type of financing that you take out and the combination of financing:

  • Personal finance and credit cards should not be more than 33% of your monthly income
  • Similarly, auto finance must not be more than 33% of monthly income

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What if I have credit cards that I have never even used?

  • In case of credit cards under a customer’s name, 5% of the total credit limit of all the credit cards are taken into consideration when calculating your DBR. Remember that even if you have not used the card, its total limit will still eat into your allowed DBR
  • For example, if you earn a monthly salary of 20,000 SAR and you have 3 credit cards with a combined limit of  55,000 SAR, your maximum allowed DBR of 33% is 6,600 riyals per month. 5% of your total credit card limit of 55,000 will be 2,750. This means that even if you use these cards or not, thy will reduce your maximum allowed financing to 3,850 per month. Your new DBR becomes 19.25%
  • If you are not using your credit card, you may consider cancelling it so that you do not reduce your DBR.