Personal loans are an extremely versatile financial tool. However, many borrowers aren’t sure how much personal loan they can get.
Every financial situation is unique. Plus, many factors go into how much you can borrow. Understanding some quick and easy basics will give you an idea of how much personal loan you can get.
To get you started, here’s a quick overview of personal loans, a borrower’s guide, and a calculator.
Personal Loans 101
Personal loans can help you do a lot of things like consolidate debt, pay off high-interest credit cards, make home improvements, buy big-ticket items, or pay for unexpected expenses – like auto repairs.
Personal loans are different from other loan types – like car loans and mortgage loans – because they don’t require collateral to back them up. You get a lump sum of cash and pay it back in easy installments. Plus, personal loans frequently feature fixed-interest rates. That means that when you get the loan, you’ll know exactly how much it will cost you to borrow the money.
Personal loans are often a great alternative to making big purchases on your credit card. Credit card rates can change, costing you more money than you intended. Personal loans typically offer lower rates than credit cards and allow you to build up a consistent payment history on your credit report.
But, with amounts ranging from a few hundred dollars to over $30,000, it can be tough to figure out how your personal loan might look. Here’s a super-simple guide and a Personal Loan Calculator to get you started with figuring out how much you can borrow with a personal loan.
Personal Loan Guide: How Much Can I Borrow?
When you apply for a personal loan, several factors will be considered. Your lender will take a look at your full financial picture by viewing your credit report. Your income will also be reviewed to ensure that you have room in your budget to pay back the loan.
However, those factors aren’t the only things that will be considered. At TEG FCU, there is more to your creditworthiness than your credit score. We’ll look at your history with us, review your ability to repay the loan and how you’ll use the funds, in order to help you figure out the best solution.
Also, remember that different lenders offer diverse personal loan options and have varied requirements, rates, and repayment terms. Research different lenders to discern which financing will work the best for your situation.
Here are a few factors that play into how much you may qualify to borrow with a personal loan.
If your credit history is limited or not great, the amount that you can borrow will likely be less. But, a personal loan can be a fantastic way to build your credit and invest in your future borrowing capacity.
Interest rates can fluctuate based on things like your credit rating and how long you’d like to spread out the payments. As a general rule of thumb, rates are frequently higher for longer terms and larger amounts.
Credit union personal loans typically have lower maximum interest rates than most traditional bank and online lenders. For example, federal credit unions cap annual percentage rates (APRs) at 18%, meaning even if you don’t have stellar credit, you won’t pay more than 18% in interest. This is great considering some online lenders have interest rates as high as 36% for borrowers with low credit scores.
Still, there are some easy ways to save on interest. We offer TEG FCU members an interest rate discount when payments are set up for automatic withdrawal. Plus, you can make payments more frequently to cut down on the overall interest that you’ll pay.
Payment Amounts & Terms
Payment amounts and terms go hand-in-hand. Generally speaking, when you borrow a larger amount, you can spread the payments out over a longer time frame. If the amount that you borrow is smaller, you’ll likely need to pay it back over a shorter length of time.
When you start your application, your loan officer can help you figure out how these factors fit together to build the best payment plan.
Personal Loan Calculator
Our Personal Loan Calculator takes the guess-work out of estimating your payments. Simply input the amount that you’d like to borrow, how long you’d like to pay it off, and the interest rate.
Before you apply, use this calculator to determine how a personal loan payment might fit into your budget. A little research in the beginning can help you figure out the best solution. While this won’t give you a full picture of the amount for which you might qualify, it allows you to map out your goals.
The good news is, your credit union is your partner in financial planning and success. If you need a hand with figuring out what will work best, we’re just a call or a click away.