ability to pay definition

ability to pay

Borrower's ability to service a loan from his or her disposable income or cashflow, or the taxpayer's ability to pay the tax. Called 'capacity' in banking, it is a critical factor in obtaining a loan. See also five C's of credit and fixed charge coverage ratio.

ability to pay is in the Banking, Commerce & Finance subject.

ability to pay appears in the definitions of the following terms: dividend cover, risk, weighted average contribution margin ratio, coverage ratio, debt service coverage, gilt edged security, interest coverage ratio and ability to pay principle

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