Answer: Capacity refers to the ability of a person to pay back the loan on time.
Explanation:
Hi, Capacity refers to the ability of a person to pay back the loan on time.
The ability to repay the loan is calculated by evaluating someone's debts and expenses.
Banks evaluates the debt-to-income ratio (how much you owe versus how much you earn) the lower your ratio, the more confident banks will be in your capacity to repay the money you borrow.
Feel free to ask for more if needed or if you did not understand something.
