If you need a sum of money for a specific purpose — perhaps to pay medical bills or renovate your home — you might consider applying for a personal loan. You could pay for these expenses with your credit cards, but your credit limit might be too low to cover your costs, or using your cards might lead to overspending or having to pay high interest rates. Instead, you can borrow money with a personal loan for the exact amount needed with a predetermined interest rate, a fixed term and a predictable monthly payment.
The amount of money you borrow depends on your needs, your creditworthiness and the lender. Find out how much money you can borrow from different lenders and what factors will determine the amount of money lenders will let you borrow.
How Much Money Can You Borrow With a Personal Loan?
If you meet lender criteria, you could qualify for a range of loan amounts from lenders, which include conventional banks and peer-to-peer lenders. Some loans start at as little as $1,000. If you need a larger sum of money, some lenders might provide a six-figure loan.
Here are the current personal loan ranges available from conventional banks.
|Conventional Lender||Personal Loan Amounts|
|Citibank||$2,000 to $50,000|
|Discover||$2,500 to $35,000|
|Wells Fargo||$3,000 to $100,000|
Leading peer-to-peer lenders offer personal loan amounts similar to those offered by banks.
|Peer-to-Peer Lender||Personal Loan Amounts|
|Lending Club||$1,000 to $40,000|
|Prosper||$2,000 to $35,000|
Factors Lenders Consider When You Apply for a Personal Loan
When reviewing your application, lenders look at a number of factors including your gross monthly income or annual income, employment history, and current debt obligations to assess your debt-to-income ratio. Additionally, some lenders will look at your address as a factor for eligibility because not all loan products are available in all states. Before applying for a personal loan, make sure you have a clear understanding of the following factors.
A lender wants to know what you’ll do with the money before they lend it to you. Depending on the individual lender, the purpose of the loan could impact the amount you can borrow or your ability to get a loan at all.
Typical purposes for personal loans include:
- Auto repair
- Credit card refinancing
- Debt consolidation
- Medical and dental expenses
- Vacation costs
- Wedding expenses
- Moving and relocation costs
- Baby expenses or adoption fees
- Home renovations
- Other major purchases
Lenders want to know you have a specific purpose in mind for borrowing money. If you just need some extra cash to pay your monthly expenses, consider using a credit card you can pay off quickly or increasing your income with a hobby or side job.
Before applying for a personal loan, determine exactly how much money you need to borrow. Never borrow more than you need or can pay off in a reasonable amount of time.
Another major factor lenders consider is your creditworthiness. Generally, a higher credit score could mean better loan terms. A good credit score and credit history shows lenders that you’re a trustworthy borrower. If you have a good credit score, you’re more likely to get a low interest rate.
Though it’s possible to get a personal loan with bad credit, a low credit score could make it more difficult to obtain a loan. If your score is fair or poor on the credit rating scale, seek out a lender that offers loans for people with bad credit.
Most lenders use a standard credit score, like your official FICO credit score, which measures your credit rating on the following scale:
- Exceptional: 800-850
- Very good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 579 and below
Strategies to Get the Personal Loan Amount You Need
Once you’ve determined the amount of money you want to borrow, it’s time to apply. Here are a few strategies to increase your chances of getting your application approved for the maximum loan amount you need:
- Review your three credit reports, which you can get for free once a year from AnnualCreditReport.com. Look for incorrect information that can be fixed or else your credit score could be adversely affected. Correcting your credit history can be a lengthy process, so review your reports at least a few months before you intend to apply for a personal loan if you can. If you spot an incorrect item, contact the credit reporting companies to dispute the error on your credit report.
- Don’t apply for more money than you need, because it might be harder to get a personal loan for a higher amount. Also, borrowing more money than you absolutely need could lead to years of loan payments and hundreds of dollars in interest payments.
- Don’t submit too many applications with different lenders at once. When you apply for a personal loan, the lender reviews your credit report, which counts as a hard inquiry on your credit history. Having too many inquiries might hurt your chances of obtaining a loan with the best terms.
Borrowing money for a personal loan is a major financial commitment. Research the different lenders for the amounts and terms you desire. Do your homework to increase your chances of being approved for a personal loan with the most advantageous terms possible for your situation. And remember, like any other debt, personal loans need to be repaid. Make a debt repayment plan before you borrow money and stick to it until you are debt-free.
Find Out: How to Get the Best Personal Loan Rates
The loan amounts included in this article are current as of Jan. 23, 2017, and are subject to change at the financial institutions’ discretion. GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company, which serves more than 100 national, local and online financial institutions. Some companies mentioned in this article might be clients of ConsumerTrack, Inc.,