How much can I borrow with a personal loan?

How much you can borrow with a personal loan depends on your lender’s maximum lending capacity, the type of loan you opt for, your debt-to-income ratio, your income and your credit score.  

While your chosen lender may offer a maximum lending limit, how much you can actually borrow with a personal loan really comes down to you and your finances. Let’s take a closer look at the different factors that affect the loan sizes available to you. 

Not sure how personal loans work? Dig into our complete guide: What is a personal loan?

First off, the type of loan you opt for has a big impact. There are two common types of personal loan: unsecured and secured. As secured loans provide more security for the lender, many lenders will offer larger borrowing amounts with this loan type. 

For instance, at Wisr we offer unsecured personal loans up to a maximum of $64,000 and secured personal loans up to $150,000. 

Unsecured personal loans

An unsecured personal loan isn’t secured against an asset that you’ve put up as collateral. As this is riskier for the lender, the maximum lend size may be smaller compared to a secured loan and the interest rate may also be a little higher.

Secured personal loans

A secured personal loan is secured against an asset, like a car. The asset is used as collateral so that if you were to stop making your loan repayments, the lender could repossess the asset to recover their costs. As this option gives the lender an extra layer of security, there’s often scope to borrow larger amounts.

Your debt-to-income ratio also has a big impact on how much you can borrow with a personal loan. Why, you ask? Well, if you’re already responsible for other loan, credit card or mortgage repayments, a lender will have to consider how much more debt you can take on without putting yourself in financial difficulty. 

If you’re thinking about applying for a personal loan, you can lower your debt-to-income-ratio by reducing the credit limits on your credit cards or cancelling any that you don’t need. You may also want to think about repaying any outstanding credit card debt before taking on a loan.

As you might expect, how much debt you can afford to take on will be impacted by your income. The greater your income, the more likely you are to be able to make larger loan repayments. If your income is lower, it’s likely that you’ll only be able to take on a smaller loan.

Remember though, no matter how big your income, it’s always important that you don’t stretch yourself too thin. Only borrow an amount that you can comfortably afford to pay back and won’t put you in difficulty should your circumstances change.

Finally, your credit scores will also influence how much you can borrow with a personal loan. As your credit scores are an indicator of how likely you are to repay your loan, the better your credit score the more likely that you’ll qualify for the full amount that you’re looking to borrow. 

On the flip side, if you have a lower credit score, you may have less loan options available to you. Before you take the plunge and submit a loan application, it can be a good idea to check in with your credit scores and see if there are any quick wins that’ll give it a boost. You can check your credit scores for free on Wisr App to quickly find out where you stand. 

Clueless when it comes to credit scores? Check out our 7 ways to improve your credit scores and give yours a boost.

In summary, there are a few different factors that affect the amount of money you’ll be eligible to borrow. Here’s a quick roundup. 

The lender’s maximum loan amount

Most lenders will have a maximum lending limit. This will vary from lender to lender.

The type of loan you choose

The maximum loan amount on a secured loan can be higher than an unsecured loan.

Your debt-to-income ratio

How much debt you already have will impact how much debt you can take on.

Your income

The bigger your income, the bigger the loan repayments you’re likely to be able to afford.

Your credit scores

A higher credit score suggests that you’re more likely to be able to repay your loan without any difficulties. 

Have a better idea of what influences how much you can borrow with a personal loan? Great. From here, you can quickly check your loan options and what’s available to you by getting a rate estimate. It only takes two minutes and won’t affect your credit scores.