The amount of money that one will be allowed to borrow using a personal loan is highly relative. There are many factors that affect this number. As a word of caution, when you discover the amount you can borrow, it is also wise to look into the amount you will be willing (and can afford) to pay when you repay the loan later on.
If you are thinking about applying for a personal loan for the first time, this article will help you get all the information you need to know before you do.
Personal Loans: How Much Can One (And Should One) Borrow?
Before actively looking for a personal loan, it is a good idea to know what you are getting into. A personal loan may be used for a variety of different purposes. The amount you can get when you apply for a personal loan highly depends on your credit, the amount you want to borrow, and how long you intend to pay off the loan.
Unlike other types of loans that have collateral, personal loans do not. This is why the interest rates for this type of loan tend to be higher than other loan types.
The General Range of Personal Loans
The general borrowable amount for personal loans may fall anywhere between $100 and upward of $100,000. However, the final amount a borrower may agree to will depend on the amount they need and how much they can afford to repay.
Improve Your Credit Before Applying
One way to actively increase the amount that lenders offer on your loan is to improve your credit score. There are ways to tweak your credit before you take out a loan. Paying your bills on time, or at least the minimum amount due on all your payables, will help improve the quality of your credit. Also, not taking out new credit cards during the time of your loan application will help your credit score stay on the higher side.
Factors that Affect the Borrowable Amount
The reason why not all personal loans carry the same amount is that there are many factors that affect the borrowable amount. Aside from your credit score, your debt-to-income ratio may also affect the amount your lender will offer you. They will look into this ratio and see how much debt you currently have and base the amount they offer you on this, your credit score, and how much income you receive. All of these factors will determine your capacity to repay the loan later on.
However, even if you are offered a high loan amount, it is best to only agree to loan the amount you actually need. This will help you prevent yourself from taking out a loan that is too big if you do not need the entire amount the lender is offering anyway.
Personal loans come in all different forms and amounts. What gets approved for one person may not be the same for another. Now that you are aware of the different factors that affect the amount you can get for your personal loan and how you may possibly be able to alter that amount by improving your credit, you are now ready to apply! It is also worth noting that finding a lender that will help you find the best loan to suit your needs is a good idea.
Should you be in need of a ,personal loan, come to Mid-Town Finance Company. Our business makes straightforward, fair, honest loans and believes you can’t always judge a book by its cover when it comes to past credit. We will never turn an applicant away and believe in the value of relationships – especially in times of need. Please call to inquire about a loan today.