How Big of a Personal Loan Can I Get?
posted on Thursday, February 17, 2022 in Financial Tips
A personal loan is a debt you acquire from a financial institution that you’ll have to pay monthly. They can be used to pay for emergency costs, start up businesses, and other important expenses. They have higher interest rates than other types of loans and should only be taken if necessary.
However, you may be wondering how much money you can get. Here are a few things you need to learn about before you get a loan.
Factors That Can Determine Your Loan Amount
Most financial institutions offer loans that range from $1000 to $100,000 that can last from 12 months to 7 years. With that said, there are a few things that can determine how much money the financial institution will offer you.
- Salary – Loan lenders will require you to provide an annual salary report before you can qualify for a loan. You also have to meet a certain minimum requirement.
- Credit Score History – Your credit score is also a major factor in determining how much money you will get. Similar to income, different financial institutions can have varying minimum credit score requirements.
- Collateral – Some lenders may require you to pledge collateral, especially for secured personal loans. It may come in the form of cash, real estate, vehicles, and others.
- Debt-to-Income Ratio – The lender will also look at your debt-to-income (DTI) ratio. The DTI ratio is the percentage of your monthly income that goes to paying your debts.
How Your Salary Can Affect Your Personal Loan Application
Whenever you apply for a personal loan from a financial institution, lenders will review your eligibility. Salary and income are important factors because they can show the lender how capable you are of paying your bills. If you don’t make enough money, you can potentially rack up a lot of debt, which can negatively affect your credit score.
However, just because you have a high salary doesn’t guarantee you’ll get a bigger loan. It all depends on how capable you are of paying off your debt and how low your credit risk is. Although there is no set income requirement for personal loans, you may need to have a salary of $15,000-$20,000 annually for the lowest loans available.
Personal loans are a great way for you to achieve your financial goals. If you have more questions, feel free to contact Community 1st Credit Union and talk to our C1st representatives.