Recently, the couple realized the severity of their situation when they tallied their debts. The mounting pressure of high$-$interest rates and multiple debt payments each month led them to come to NAITLAB Financial regain control of their finances.

During your conversation with the clients, they provide the following information to you:

Assets:

Maria$$s diamond bracelet $$3000$

Sal$$s Antique $1966$ Mustang $$38,000$

Vehicles Owned:

$2017$ Toyota Highlander $$25,000$

$2023$ Chev Silverado $$45,000$

Home: $450,000$

Liabilities:

TD MORTGAGE $305,000$ Monthly Payments $$1950$

TD VISA $$ Owing $12,000$ Limit $$15,000$ paid off TD visa balance is $0$

BMO MCD $$ Owing $$9,000$ Limit $$10,000$

TD loan Balance $$15000$ owing with payments of $695/$month

GMC Finance lease $$ monthly payment $$650$

Refer to the Credit Bureau to confirm the information provided is correct.

$$

Questions to answer:

$1.$ Using the paystubs provided that are in your team$$s file: Calculate both client$$s monthly income.

Calculation for Sal's Monthly Income:

$$ Regular earnings: $$45\mathrm{.}6780$ hours $2$ weeks $=$ $$7,330\mathrm{.}72$

$$ Deductions: $$962\mathrm{.}23$

$$ Net pay: $$7,330\mathrm{.}72-$ $$962\mathrm{.}23=$ $$6,368\mathrm{.}49($monthly$)$

Calculation for Maria's Monthly Income:

$$ Regular earnings: $$34\mathrm{.}2075$ hours $4$ weeks $=$ $$10,260$

$$ Deductions: $$758\mathrm{.}00$

$$ Net pay: $$10,260-$ $$758\mathrm{.}00=$ $$9,502\mathrm{.}00($monthly$)$

Sal's and Maria's monthly incomes are calculated based on their hourly rates, hours worked, and deductions from their pay stubs.

$2.$ Would you include the jewelry and antique vehicle in your application

Maria's diamond bracelet and Sal's antique $1,966$ Mustang could be included as assets in a loan application if they are willing to use them as collateral or demonstrate their value to strengthen their application. However, the lender might have specific criteria for accepting assets as collateral.

$3.$ What assets that the client$$s own $($including those listed on NAITLAB Financial$)$ could be considered for collateral, if needed?

Identifying Potential Collateral Assets Owned by the Clients:

$$ Maria's diamond bracelet: $$3,000$

$$ Sal's Antique $1966$ Mustang: $$38,000$

$$ Vehicles: $2017$ Toyota Highlander $($$$25,000)$ and $2023$ Chev Silverado $($$$45,000)$

$$ Home: $$450,000$

Collateral Consideration:

$$ Evaluate the market value and ownership status of assets to determine their suitability as collateral for loan applications.

$4.$ Calculate the payment of the loan of $$20,000$ interest Prime $+2\mathrm{.}0\%$ and the term is $4$ years $48$ months. $($assume prime is $7\mathrm{.}2\%)$

Given Parameters:

$$ Loan Amount: $$20,000$

$$ Interest Rate: Prime $+2\mathrm{.}0\%($Prime rate $=7\mathrm{.}2\%)$

$$ Term: $4$ years $(48$ months$)$

Calculation:

$$ Prime rate $+2\mathrm{.}0\%=7\mathrm{.}2\%+2\mathrm{.}0\%=9\mathrm{.}2\%($annual interest rate$)$

$$ Monthly interest rate $=9\mathrm{.}2\%/12=0\mathrm{.}7667\%$

$$ Number of months $=48$

Using Loan Payment Formula:

P $=($rP$)/(1-(1+$ r$)^(-$ n$))$

Where:

$$ P $=$ monthly payment

$$ r $=$ monthly interest rate $($as a decimal$)$

$$ P $=$ principal amount

$$ n $=$ number of payments

Final Calculation:

$$ Monthly payment $=$ $$445\mathrm{.}29$

The loan payment is calculated using the provided loan amount, interest rate, and term length, applying the formula for an amortizing loan. Sal's monthly income is $$6,368\mathrm{.}49,$ Maria's monthly income is $$9,502\mathrm{.}00,$ and the monthly payment for the loan is $$445\mathrm{.}29.$

$5.$ Calculate GDS and TDS $($before the new loan payment and after including the new loan payment$).$ Assume the following: heating is $$150,$ taxes are $$250$ Show your work here.

Total monthly cost $-1,950+250+150=2,350$

Gross Debt Service $($GDS$)$ Ratio $=($Total Monthly Housing Costs $/$ Gross Monthly Income$)$ x $100\%$

GDS $2,350/15,870\mathrm{.}49$ X$100=14\mathrm{.}80$

TDS before the new loan payment

TDS with the new loan payment

$6.$ Are these ratios acceptable? Why or why not?