So you need money, and you’ve decided a personal loan is the way to go. And now you’re thinking, “How much money can I get?”
The answer, as you might expect, is exactly what you don’t want to hear: It depends.
You may have no trouble getting a $50,000 personal loan, or you may struggle to get a $500 loan.
What Amount Can I Borrow With a Personal Loan?
Generally, with a personal loan, you’ll be able to get up to $50,000.
That’s not the absolute highest personal loan out there, but most lenders offer loans this high. Plenty of borrowers instead will apply for a lower loan, such as $3,000 or $20,000 or $30,000.
Whether you’re given the loan, of course, is another story. Hopefully you will, but typically, there are several factors that will help a lender to decide if they’re going to lend you money.
Credit score and history
The more money you need to borrow, the higher your credit score needs to be. It’s also important that your credit history looks sharp. That is, you hopefully don’t have a recent history of missed and late payments to your mortgage, car loan, student loans or credit cards.
A stellar credit score and history won’t guarantee a lender will be able to lend as much money as you want, but those two things definitely helps make your case.
An exceptional credit score is generally between 850 and 800. That’s very rare, though. If yours is lower, don’t feel disheartened. Many creditors will grant a personal loan if your credit score is between 799 and 740. This score is considered very good.
If your credit score is a bit lower, between 739 and 670, that’s considered a good credit score. Obviously, if your credit score is around 739, at the high end of “good,” many lenders will look favorable at this. If your credit score is closer to 670, it’s still good, but a lender will probably offer less favorable terms than borrowers with a credit score in the 730s or above.
If your credit score is 669 to 580, it’s considered “fair.” As you can imagine, if you have a high fair score, you may be able to get pretty fair terms on a loan. There are a lot of loans for fair credit out there.
If your credit score is 579 to 300, then it’s considered “poor” credit, and if you’re offered a loan, the interest will be high enough that you should probably examine the terms very carefully before deciding whether to take on the loan. Some online loans prey on people with poor credit and offer horrifically high interest rates. Still, some loans for people with poor credit will be worth considering.
Employment
Although it’s possible to get a loan when you are unemployed, lenders prefer to see that you have a job, and they also like to see that you’ve been working at a job for awhile. If you just took on a job a month ago, for all the lender knows, you’re on a probationary period and may not be working there much longer.
On the other hand, if you were at a previous job for five or ten years, the lender may recognize that you have a stable employment record and are a good credit risk.
Lenders worry if it looks like you are often unemployed. If that’s the case, what if you lose your job? Will you be able to pay them back? Fairly or not, that’s what a lender worries about.
Income
Your employment is important but so is what you make. Lenders want to know that you’re making enough of an income that paying back the loan isn’t going to be a problem. So naturally, the more you borrow, the more you should be making.
If you’re earning minimum wage and making less than $50,000 a year, probably no lender will offer you a $50,000 personal loan.
The math would suggest you would have a very tough time paying that back.
Debt ratio
As a general rule, personal loan lenders like for borrowers to have a 35% to 40% DTI ratio, or debt-to-income ratio.
The ratio compares the money you pay to a debt, like your mortgage, car, and credit cards, against the income you make.
So if you make $7,000 a month, and 35% of that’s going to the mortgage, car, credit cards and student loans, a lender may be inclined to lend you money. If your debt is under 35%, your odds of approval should go way up.
If you’re over 40% and approaching 50%, you still may get a loan, but after 50%, it gets pretty tough to find willing lenders.
Also, you should ask yourself, “If I’m paying half my income towards debt, do I really feel safe in taking more on?”
If you can shed some of that debt first, it’ll be easier for you to borrow the lender. You’ll also have more financial wiggle room to pay the lender back.
But don’t feel like you’re not going to get a loan if you do have a decent amount of debt. Most Americans do have a lot of debt and still manage to pay it off, and lenders understand that. In fact, according to Experian, one of the three major credit bureaus, the average American is carrying $90,460 in debt.
Type of loan
People use the term, “personal loan” pretty generically. Borrowers sometimes take out actual business loans, or they’ll take out a personal loan and use it for business. People use personal loans for vacations, paying off credit card debt, to pay off medical bills, to pay off a car – and on and on go the reasons.
You technically don’t have to tell a lender what you’re using the money for, but giving out that information may help with getting a loan. After all, some lenders specialize in certain types of loans.
How to Get a Bigger Personal Loan
If you’re offered a loan, but it isn’t as much as you wanted, you could try a number of strategies, all of which will depend on the policies of the lender.
Get a co-signer for your loan. That would mean the co-signer, often a spouse or family member, would pay the loan if somehow you could not.
Put up collateral. In other words, if you don’t pay the loan, you would give up something valuable in return, like cash in a savings account. This can be risky – but it may be worth discussing with your lender. Fortunately, there are a lot of unsecured loans that borrowers can take out without collateral.
Apply for a different kind of loan, such as home equity loan. Your home would ultimately be the collateral. That can be risky, but sometimes the loan’s terms might be better.
Raise your credit score. You may need only a small bump up in score of a few points to get your score high enough to get the loan. That could be as easy as paying off a lingering medical debt or similar. There’s no set amount of time it takes to raise your score.
Pay off debt. While you’re raising your credit score, lower your debt-to-income ratio, if you can. Set a budget and start shoveling money towards your debt. It can be a long process, but that would, in the future, likely convince lenders to give you a bigger personal loan.
Comparison shop. You should never forget to do this when trying to get a bigger personal loan. Just because one lender wouldn’t give you a bigger loan doesn’t mean another lender wouldn’t.
Take out another loan. It gets harder to convince lenders to loan money after you’ve just taken out a loan. But you may want to try to get two or three loans if the first loan isn’t enough money.
Personal Loan FAQs
How hard is it to get a $20k personal loan?
There is no easy answer. For some people, it’s going to be easy. If you have a high credit score, your debt-to-income ratio is low, and you make good money, it may be pretty straightforward.
But you may find it challenging if your credit score is shaky, your debts are high enough that you are looking at years, not months to get them paid off, and your regular paycheck is kind of sickly.
How much money do you have to make to get a personal loan?
There is no exact amount of money that you have to make to get a personal loan. How much of a loan you can get is going to depend on factors such as your credit score, the amount of debt you already carry and how long you’ve been employed.
That said, individual lenders often have a set minimum amount of money that you need to make before they will give you a loan. One bank may declare that a borrower has to make at least $24,000; another may make $28,000 as the cut-off point. But there is no universal one amount of money that you have to make before you can get a personal loan.
How long do I have to be at my job to get a personal loan?
It depends on the other factors that go into deciding your loan. Some lenders will require that you be at a job for six or 12 months before they will entertain the idea of offering you a loan. Other lenders don’t have such rules, and some might look at your entire employment history before making a decision.
