The majority of personal loans range from $1,000 to $50,000, while some lenders may occasionally approve loans up to $100,000. Many personal loans are for a lot less. TransUnion research indicates that in the fourth quarter (Q4) of 2022, the average personal loan balance for new originations was $8,000.
The best personal loans have low interest rates; however, even with low interest rates, large personal loans may have high monthly payments. Weigh the pros and cons before taking out a large personal loan.
A Comprehensive Guide to Maximizing Your Borrowing Potential
You’re considering applying for a personal loan, but you’re unsure of how much you can truly borrow. The answer, unfortunately, isn’t as straightforward as you might hope. A number of variables come into play, such as your income, credit score, and debt-to-income ratio.
But don’t worry, we’ve got you covered. We’ll dive into the world of personal loans in this in-depth guide, covering the maximum amounts you can borrow, the variables that affect your ability to borrow, and the advantages and disadvantages of taking out large personal loans. Additionally, if you’re not quite ready to commit to a large loan, we’ll include some other options for you to think about.
The Big Picture: Maximum Loan Amounts
To cut to the chase, the maximum amount of a personal loan that you can normally obtain is approximately $100,000. However, this is just the tip of the iceberg. While some lenders only allow loans up to $50,000, many only allow loans up to $40,000.
The Average Borrower:
It’s important to remember that the average personal loan balance in 2021 was a mere $17,064. So, while the possibility of securing a $100,000 loan exists, it’s not the norm for most borrowers.
Factors Influencing Your Borrowing Power:
Let’s now discuss the important variables that affect the maximum amount you can borrow:
- Income: This is a big one. Lenders want to be sure you can comfortably repay the loan, so your income plays a crucial role in determining your eligibility and loan amount.
- Credit Score: Your credit score is like your financial report card. A higher score indicates a lower risk for lenders, which can translate into a higher borrowing limit.
- Debt-to-Income Ratio (DTI): This ratio measures your monthly debt payments against your income. A lower DTI means you have more room in your budget for additional debt, potentially increasing your loan amount.
Large Loan? Big Responsibility:
It’s important to consider the advantages and disadvantages before taking out a large personal loan:
Pros:
- Flexibility: A larger loan gives you more options to tackle significant expenses like medical bills or home repairs.
- Debt Consolidation: You can consolidate multiple high-interest debts into one loan, potentially saving money on interest.
Cons:
- Debt Burden: A large loan means a bigger debt obligation, which can impact your credit score and ability to qualify for future loans.
- Higher Payments: Be prepared for potentially hefty monthly payments, which could strain your budget and increase the risk of missed payments.
Alternatives to Consider:
If a large personal loan isn’t quite your cup of tea, fret not! Here are some alternative options to explore:
- Home Equity Loans/HELOCs: These loans use your home as collateral, potentially allowing you to borrow larger amounts. However, remember that you could lose your home if you default on the loan.
- Credit Cards: For smaller purchases, a 0% intro APR credit card can offer a temporary interest-free financing option.
The Bottom Line:
The maximum personal loan amount you can secure depends on your individual financial circumstances. Carefully consider your needs, budget, and repayment capabilities before taking on a large loan. Remember, there are always alternative options available, so explore your choices and make the decision that best suits your financial situation.
Additional Resources:
- Experian CreditMatch™: Compare personal loan offers from various lenders based on your credit score.
- Experian Credit Report: Monitor your credit health and identify areas for improvement.
- Experian Credit Score: Understand your creditworthiness and how it impacts your borrowing potential.
Remember, knowledge is power! By understanding the factors that influence your borrowing potential and exploring alternative options, you can make informed decisions about your personal loan journey.
What Can’t You Use a Personal Loan for?
With most lenders, you can use your personal loan for just about anything. Certain lenders determine your personal loan rate based on the purpose of the loan, while others impose limitations on the loan’s use. For instance, some might not allow you to use funds to pay for higher education or business expenses.
What Can I Do if I Don’t Qualify for the Loan Amount I Need?
Your options are limited if you apply to multiple lenders and are turned down for a personal loan in the amount you require. However, there are alternative steps you can take.
First, you can find a co-signer—ideally someone with a high income and good credit—to co-sign your loan application. Lenders will then be more willing to offer you a larger loan.
Some lenders provide large loans to borrowers whose credit scores would prevent them from being approved for a standard personal loan from a bank. On the other hand, these lenders frequently have high interest rates, which can make these loans very costly in the long run.
You could also consider alternative ways of raising cash. If you can sell your vehicle or other household goods, you can raise money quickly.
Lastly, if you have equity in your house, you may also want to think about getting a home equity line of credit or loan (HELOC) These loans use your home equity as collateral to secure a loan that can provide lower interest rates.
If you cannot afford to repay a home equity loan or a HELOC, you risk losing your home.
There are also ways to raise the maximum personal loan you can get over the long term. Specifically:
- Improve your credit score. Making timely debt repayments, applying for credit-builder loans, or obtaining credit cards are some of the ways you can start building a strong credit history or mending a damaged one.
- Pay down debt. The amount that a lender will lend you on a personal loan will depend on your DTI ratio. Therefore, you may be able to borrow more money if you reduce your debt load.
3 Best Personal Loan Companies
FAQ
What is the maximum I can borrow on a personal loan?
What is the highest limit for personal loan?
What is the maximum amount to borrow for a personal loan?
What is the most money you can get on a personal loan?
What is the largest personal loan you can get?
The largest personal loan you can get is generally $100,000, with a handful of lenders offering loans of this size. But many lenders have maximum loan amounts between $40,000 and $50,000.
How much can you get a large personal loan?
But many lenders have maximum loan amounts between $40,000 and $50,000. Even if a lender does offer very large loans, you may be approved for a lower amount than the lender’s maximum based on your income, credit score and other factors. It’s important to understand just what you’re signing up for when you get a large personal loan.
What is the maximum amount of a personal loan?
Maximum loan amounts also vary widely by lender and loan type. Lenders like LightStream and SoFi offer personal loans up to $100,000, but these are among the most competitive loans in the market. Most lenders offer up to $50,000 or less.
What is the highest amount a personal loan can be approved for?
The highest amount ever approved for a personal loan is generally $100,000, but that’s extremely rare and only under special circumstances. Rocket Loans℠ offers personal loans from $2,000 – $45,000. So, what exactly dictates how large or small of a personal loan a lender will approve you for?