Financial privileges such as a personal loan can come in handy when you find yourself stressed out dealing with major expenses. Whether it comes to your wedding, renovating your home, consolidating your debt, or managing unexpected medical expenses, a personal loan can take you out of the woods.
However, it would be wise to consider your eligibility for these financial benefits from leading banks and creditors. You might have a common question regarding how much you can borrow through personal loans. In this article, we have discussed the amount that reputed lenders generally offer as personal loans. Besides, you will get to know the factors that determine your eligibility for these privileges.
You can consider reaching out to Alpine Credits to know the best personal loan offers based on your credit score.
An overview of the general range of personal loans
You can avail personal loans of different sizes. While some creditors offer as low as $100, you can qualify for large loans up to $100,000 with a decent credit record. Also, the type of personal loan determines how much the bank or financial institution would sanction you.
For instance, you can use short-term personal loans from a payday or online lenders. In these situations, the interest rates and charges can be exorbitantly high. Besides, the payment tenure is comparatively lower.
On the other hand, the creditors design some loans for borrowers with better credit scores. In these cases, the loan tenure is higher, and the interest rate is not too high. So, you can consider the broad range of personal loans between $50,000 and $100,000.
Factors determining how much you can borrow through personal loans
With each creditor, you have a specific set of criteria that determines your eligibility. We have discussed some of the primary aspects to give you a comprehensive idea regarding the amount you can borrow.
- The offering of the lender
Each financial institution has its limitations in terms of capital and lending abilities. Therefore, you would find creditors with similar credit requirements and loan terms offering different amounts under their personal loan products. While you can obtain anything between $5,000 and $100,000 with certain lenders, others might offer you only $3,500 to $40,000. You can generally qualify for bigger loans with a strong credit score.
- Credit score
Almost all prominent lenders would evaluate your credit score to know the status of your financial health. This score also highlights your financial responsibilities and explains how you handle your money. Naturally, financial institutes prioritize borrowers with a higher credit score, offering them larger personal loans. No bank wants its borrowers to falter when it comes to repayment.
So, if you have a better credit score, preferably above 750, you can qualify for larger amounts. Likewise, if your credit score doesn’t look too good, you would qualify for a lower value.
- Income to debt ratio
Your income to debt ratio happens to be a crucial factor that determines your repayment capabilities. The financial institution would consider your annual income and ongoing liabilities or debts while calculating your repayment capability. This way, they can determine how much EMI you can comfortably handle without compromising your standard of living.
It would be wise to keep your income to debt ratio low. This ratio will naturally remain low if you don’t have too many ongoing loans. This ensures you can qualify for a higher amount through a personal loan.
Each creditor considers your financial capacities based on these factors. Based on their business policies, you might be eligible for different amounts you can obtain through personal loans. Therefore, it would be wise to shop around and check out the best offers from reputed creditors.
Tips to qualify for the maximum amount as a personal loan
Provided you are financially stable enough to make timely repayments, you might apply for the maximum amount you qualify for as a personal loan.
- In case you have a poor credit record, try to improve your credit score. A good credit score goes a long way in helping you qualify for large personal loans.
- Considering your ongoing debts, try to repay as much as possible to be eligible for larger amounts. This would lower your debt-to-income ratio. In the process, you would be able to boost your credit score and afford a larger loan.
- Financial institutions prefer lending personal loans to well-established employees. So, if you have a permanent job with a distinguished company, you can be eligible for higher loan amounts.
- Try to get a secured loan from established lenders. With collateral available, you might qualify for a higher amount since the creditors consider you a low-risk borrower.
Should you consider taking a large personal loan?
You can practically use a personal loan for anything. These loans are a versatile financial resource you can channel per your requirements. However, going for a large personal loan would be advisable only if you are confident enough to make timely repayments. Otherwise, you can settle for an amount lower than the highest eligible value.
It would be prudent to weigh your financial stability and repayment capacity before committing to a long-term repayment. So, you should go for a large personal loan under the following circumstances.
- Your income is stable and you are professionally established
- You already have an amount for an emergency expense
- The debt-to-income ratio is low
- Your credit score looks impressive
A personal loan can bail you out of different types of financial emergencies. You can use your loan to consolidate high-interest loans. Besides, you can boost the resale value of your home by renovating it using a personal loan. Under any circumstance, make sure to remain within your financial capacities and do not overuse your financial privileges.
A personal loan can help you balance your credit mix. If you are responsible enough to make timely repayments, you may consider maximizing the benefits of the credit offerings from the major banks.