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How much lenders will approve borrowers for when getting a personal loan can vary per individual. While they may set a maximum loanable amount for the service they offer, you’ll find that it is very seldom for them to approve the maximum figures to a borrower. Certain criteria need to be fulfilled and it helps when you have an idea how much the loan amount is calculated to see if there are ways that you can increase yours.
How Much Can You Borrow
Typically, lenders will offer personal loans between £2,000 and £50,000. There are also those that may raise the bar up to £100,000. However, the final figure will be dependent on the borrower’s income, his credit score, and how many existing debts he presently has.
How much you can really afford to borrow often depends heavily on the amount that you are taking home every month as income minus the bills and their expenses that need to be taken out of it. Generally, if you have existing debts, that will lessen your take-home pay even more which could eventually result in a much lower loan amount.
Improving Your Approved Loan Amount
If you want to borrow more, you should consider ways that will increase how much you are bringing home every month while decreasing your other expenses. To do this, it would help to lessen unnecessary expenses. Taking on a second job or other side jobs can help too. In addition, consider paying off some of your existing debts or close existing credit lines that you do not really use.
If you have something valuable, like a car or a property, you can use it to secure the loan and get approved for a higher amount. Lenders are likely to approve larger loan amounts when it is secured against a car or a property title since they know there is something they can use to recoup possible losses if you will fail to pay back the loan.
You might have recently taken out a personal loan. However, you’ve realised that you actually need more funds to cover another expense. You are, of course, wondering if there is a way for you to get financing for the second time. The second loan can be a huge help especially since you have grossly underestimated the financial needs. But can you?
Can You Acquire More Than One Loans
Most lenders will allow you to apply for a second loan as long as you have already paid off part of the balance of your initial loan with them. If you have established a good history concerning your repayments, then they will likely approve the application too.
However, this might not be a good thing. For the second loan, you cannot expect to get the same terms extended to you for your first loan. Loan terms and interest rates will depend on your credit score as well as the ration between your income and your credit. Since you have just recently took out a loan, expect that your debt to income ratio is going to be high and the lender will view that as a risk. Borrowers with high existing debts are generally considered high risk by lenders as this reduces their ability to get their repayments done on time.
Problems Caused By Taking More Than One Personal Loans at a Time
Aside from causing your credit rating to dip, applying for another loan when you are still paying off an initial one may make you look as if you’re in a hurry to borrow money which you obviously do not have. The lender will probably think that they might not be able to get the money back from you. If they do decide to lend you more, expect that the terms are nowhere as good as the initial loan you got. Naturally, the lenders will want to find ways on how to mitigate the risks involved.
Things to consider before getting a new loan
If you do decide to get another loan while you’re still paying for an existing one, expect that you will likely have problems getting credit in the future. When done in moderation, taking a credit can be good for your credit. But if you are getting too many inquiries on your credit report due to too many loan applications, lenders will not look at you too kindly. The new loan is going to cost you a lot more, so expect that the interest rates will be more expensive.
You’ll owe more every month as well. Multiple loans would mean more repayments to do every month. Keeping track of your due dates would be harder. Besides, it might not even be the kind of financial help you need. Always relying on loans every time you are in a financial bind will only cause you to get stuck in a debt cycle.