Personal Finance Term
Debt Service Ratio
The percentage of your monthly income that goes toward servicing all debt repayments. Each bank sets its own DSR limit; the often-quoted 60–70% is a market rule of thumb, not a Bank Negara Malaysia figure.
DSR = (Total monthly debt repayments ÷ Net monthly income) × 100. If you earn RM5,000/month and have RM2,000 in existing loan repayments, your DSR is 40%. Adding another RM1,500/month loan would push DSR to 70%, the top of that rule-of-thumb range; your bank's own limit is what counts (Bank Negara Malaysia has said it does not prescribe lending limits).
Some banks use gross income; others use net income after EPF. Existing commitments — car loans, personal loans, credit card minimum payments — all count toward DSR even if you pay more than the minimum each month.