What Does Insuffiecient Debt Capacity Mean?

Written by Alexander Clunies on January 21, 2012 – 2:23 am

Insufficient debt capacity means that an individual or business does not have the ability to take on a certain amount of new debt because allowable debt has already been incurred. For businesses, this restricts the opportunity to borrow money for expansion, and for individuals, it limits the amount they can borrow to finance various asset purchases.

    • An individual’s debt capacity is based on the amount of money he can borrow and safely repay.

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