How much can you borrow with a personal loan?
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As of Q2 2022, the average unsecured personal loan balance came out to $8,085 based on TransUnion’s Quarterly Credit Insight Report. However, how much you can borrow with a personal loan depends on the lender, your credit and your overall financial health.
Some lenders have maximum borrowing limits of $100,000 and over, although these amounts are typically only granted to the most creditworthy borrowers. The amount you can borrow – and afford – will vary from lender to lender. With a little research, it’s likely you’ll find a lender that allows you to borrow at least a portion of what you need.
How much personal loan can you get?
There are some lenders like LightStream and SoFi that offer personal loans up to $100,000. But most will offer loans of $50,000 or less, and many may cap it at just $30,000.
Regardless of the maximum amount offered by the lender, the amount you qualify for will depend on your finances. An excellent credit score, low debt-to-income ratio (DTI) and a high income will influence the amount a lender is willing to offer. If you only just meet a lender’s minimum requirements, you may be limited to a much smaller amount than the maximum loan it advertises.
Common personal loan amounts
The minimum amount you can borrow also varies by lender. Some may offer personal loans as small as $1,000. Others may set the minimum higher at $3,500 or $5,000.
If the lender sets a minimum amount above what you need, shop around to find a company that offers a lower minimum so you don’t borrow more than you need. If this isn’t possible, make sure your lender doesn’t charge prepayment penalties. This will allow you to pay down the amount you don’t need as quickly as possible to avoid added interest accrual.
What influences the amount you can borrow?
Lenders take your debts, income and credit score into account when they review your application. You will be more likely to qualify for the maximum amount if you exceed minimum eligibility criteria. Otherwise, a lender may limit the total loan amount to something you can more easily afford.
- Current debts. The amount of debt you already have will be one of the bigger factors in how much you can borrow. Your lenders will consider both your credit utilization ratio and your DTI to determine the amount you are offered.
- Income. Income is often an important factor to lenders. Even if you have a large amount of debt, a high enough income can offset it. As long as you have enough to handle your current debt and take on a new personal loan, a lender may not cap how much you are able to borrow.
- Credit score. Lenders use your credit score as one of the primary factors in determining how much you qualify for — and if you qualify at all. Even if you have minimal debts and high income, a past history of missed payments or defaults will limit how much a lender offers you.
- Employment. While you technically only need a regular source of income — which can be from benefits or self employment — some lenders will offer larger loans to borrowers with a steady, predictable monthly income.
How much can you afford to borrow?
The amount you are eligible to borrow will depend entirely on your finances and how much you are able to spend each month. A longer loan term will result in lower monthly payments, which may be more affordable in the short term. But, overall, long loan terms mean you pay more interest.
For example, a loan of $10,000 with an interest rate of 7 percent will have a significantly different monthly and overall cost depending on the length of your loan term.
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Even if you would prefer to have a smaller payment, try to pay as much as you reasonably can toward your loan to keep total costs down.
Only borrow as much as you need
No matter how much a lender offers, you should only ever borrow the amount you need to cover the expense. While it can be tempting to to borrow more, especially if it is available, avoid it. You will leave yourself in a much better financial position when you keep your monthly payments and total debts to a reasonable level.
If you aren’t sure, use a personal loan calculator to see how different amounts, rates and terms will affect your monthly payment.