How Much of a Personal Loan Can I Get?

Personal loans are a practical way to fund everything from medical bills to home renovations. If you want to make a large purchase and pay it over time, consider a personal loan. Many borrowers also use personal loans to pay for emergencies or unexpected repairs. If you want to consolidate credit card debt or make a large purchase, you will probably wonder, “How much of a personal loan can I  get?” or, more specifically, “Can I get the money I need?” 

While lender criteria and individual situations vary, the details below will help you understand personal loans and how to increase your chances of approval for the funds you need.  

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Understanding the amount you can get with personal loans

Personal loans are unsecured loans that you will repay over a set term. The loan amount you can qualify for is affected by your credit score, income, debt-to-income ratio and lender criteria. The maximum amount for a personal loan ranges from $500 to $100,000, but loan amounts vary amongst lenders. 

Factors that influence how much you can borrow

Some lenders will allow you to borrow up to $100,000, while others may only offer a maximum of $20,000. However, beyond the lenders’ maximums, there are various factors you can control that can increase your chances of securing a higher loan amount. Here are the factors to consider. 

1. Debt-to-income ratio

Your debt-to-income ratio (DTI) is the ratio between total monthly debt obligations—including mortgage or rent payments, student loans, auto loans, and other debt—and total monthly income. Lenders use a debt-to-income ratio to assess a borrower’s ability to repay a loan. 

A low debt-to-income ratio can be a major factor in your maximum loan amount. If you’re already carrying more than 40%, your chances of loan approval go down.  Lenders usually won’t approve a personal loan if your debt-to-income ratio is above 43%, and some look for a DTI of 35% or less. 

2. Credit score

Credit scores play a crucial role in determining loan eligibility. It expresses to lenders the likelihood that you’ll pay back a loan on time or risk default. The higher your credit score, typically the better the possibility of a high loan amount. However, other factors and lender criteria can affect this. Aim for a “good” credit score of 670 to 739 or a “very good” credit score of 740 or higher for increased chances of a higher loan. 

You can access your full credit report from the three major credit bureaus, Transunion, Experian, and Equifax, at annualcreditreport.com. If your credit report contains incorrect information, you can dispute it. 

To improve or maintain your good credit score, start with the basics: pay all credit cards and other debts on time every month. Setting up automatic payments can help prevent late payments. Find more tips to build your credit score within three months.

3. Income

Your income affects your ability to repay the loan. ​​A higher income can lead lenders to feel confident you can meet the monthly payments. While no rules are set in stone, if you’re earning less, even if you don’t have significant debt, lenders may only approve a small personal loan or even deny your application. Depending on the loan amount and repayment period, your income and existing debt can limit the maximum loan you can get. 

4. Employment history

Lenders look for a stable employment history and income that is stable or increasing. Since loan repayment depends on income, the lender may not want to take a chance on you if you have a low salary or an unstable income. If you’re self-employed, you may need to provide additional documentation to prove your income history. 

5. Secured loan vs. unsecured loan

While lender policies differ, you can generally get a larger loan if you opt for a secured loan rather than an unsecured loan. A secured loan gives the lender collateral to recover the loan amount in case you default on the loan, reducing the lender’s risk of loss. Of course, with a secured loan, you risk losing whatever collateral you used to get the loan—often a house, car, or other asset—if you cannot repay the loan on time. 

6. Loan purpose

Interestingly, while you can use a personal loan for anything, certain purposes can help you get more money. Some lenders will offer better rates or longer terms for specific purposes such as home improvement. 

On the other hand, if you apply for a debt consolidation loan, they’re less likely to give you favorable terms. However, this varies by lender, which is why it’s important to shop around and compare rates to find the best current offers. 

How to calculate how much you can borrow

The amount you can borrow will depend on your financial situation, credit score, and lender policies. However, let’s assume you have a good credit score for the sake of an example.

Then, you will start by calculating your total monthly cost, accounting for potential interest on the loan, lender fees, and your desired loan length. A longer loan term will mean lower monthly payments but more interest over the loan’s lifetime.

For example, your monthly costs and total interest on a $10,000 loan with a 10% interest rate will vary by loan term. 

• Five-year term: If you choose a 5-year (60-month) loan term, you’ll pay $212.47 every month for five years, for a total of $2,748.23 in interest. 
• One-year term: If you choose to repay the same loan over one year, you will need to pay $879.16 every month for a year. But you’ll only have to pay $549.91 in interest. 

While the first option has more affordable monthly payments, you’ll pay much more for that convenience. To save more long term, calculate as much as you can reasonably afford toward your monthly loan without putting your other expenses at risk to keep total costs down. 

Now, suppose you earn $5,000 monthly before taxes. If you have a monthly mortgage payment of $1,500 plus other fixed expenses of another $1,000, paying off the loan in one year might put too much strain on your budget. In that case, taking the longer term and asking the lender for a loan without an early repayment penalty can allow you to pay more whenever your budget allows.  

How to choose the right personal loan

Choosing a loan amount that fits your financial situation and repayment ability is a personal decision. However, knowledge is power. The more you can compare lenders and research current interest rates, the more prepared you’ll be to choose a loan that fits your budget.  

In addition to carefully shopping for personal loans, it’s essential to read the terms and conditions of the loan agreement before signing. 

Other tips for choosing the right personal loan:

• Check lender reputation and client reviews.
• Compare maximum loan amounts from various lenders.
• Consider alternative specialized loans like student debt refinancing or a home equity loan, if they fit your situation. 
• If you have factors working against you, like a low credit score, there are still options available. Consider personal loans for bad credit or working to increase your credit score before applying. Or, find ways to get $100 with same-day funding. 

Final tips to get a personal loan

Factors such as your debt-to-income ratio, credit score, total income, employment history, and even the loan purpose can affect the amount you can get for a personal loan. Beyond that,  personal loan amounts vary depending on your chosen lender and overall financial situation when you apply. Remember only to borrow enough for a specific purpose or expense, as repaying the loan with interest can lead to greater financial strain long term. 

You can use a personal loan calculator to see how different amounts, interest rates, and terms could affect your monthly payment and determine what you can comfortably afford. Remember to compare rates and shop around to find the best available rates. 

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