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Every now and then, you may want to take out a personal loan to cover a planned or unexpected expense. With a personal loan, you can receive a lump sum of money upfront and repay it over time via fixed monthly payments or installments over an agreed-upon term. But how much will a bank lend you for a personal loan? Keep reading to find out.
There is no shortage of lenders who offer personal loans. While some offer larger amounts than others, most will allow borrowers to borrow anywhere between $1,000 and $50,000. Some lenders will even approve the most qualified borrowers for a $100,000 personal loan, but they’re less common.
Your financial situation will help lenders decide what loan amount to approve of you. In most cases, lenders will consider the following:
Your credit score is a three-digit figure that shows how likely you are to pay off debt. The higher your credit score, the more responsible a borrower you are in a lender’s eyes. While lenders prefer solid credit, some may approve you for a sufficient loan, even if your credit is on the lower side.
When you apply for a personal loan, a lender will likely ask you to share your monthly or annual income. Your income can come from a traditional full-time job, self-employment, alimony, Social Security, retirement accounts, or any other sources. It can give them an idea of what type of payments you can comfortably handle. The more you earn, a lender might be willing to lend to you.
To calculate your debt-to-income ratio, divide your monthly debt payments by your monthly gross income. This figure shows how much of your income goes toward debt. Lenders generally look for a ratio of no more than 36%. If you have a high debt-to-income ratio, you may not be able to borrow as much money because lenders may worry you won’t have enough income to cover all your debt payments, including your personal loan.
Fortunately, there are some steps you can take to get approved for a larger loan, including:
There are a variety of factors that will determine how much the bank, or another lender will lend for a personal loan. By becoming familiar with what they are, you can get a good idea of what you may qualify for.
Name: Keyonda Goosby Email: keyonda.goosby@iquanti.com Job Title: Consultant
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