A person can typically afford a monthly payment of around 35 percent of gross income, less any long-term loans, according to most lending institutions.
1 Investment banks, insurance and finance firms, mutual funds, pension funds, collateralized loan obligations (CLOs), private equity funds, and hedge funds are examples of institutional lenders.
Consumer loan interest rates are often expressed as an annual percentage rate (APR) (APR). For the right to borrow their money, lenders require a certain rate of return. An APR is used, for instance, to quote credit card interest rates. In the earlier example, 4%.
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