Simply How Much Loan Do I Qualify

How much loan do you qualify for? Well, it will be absolutely ridiculous to expect a specific answer. Actually, the amount of loan you can qualify for depends on several factors. There are so many lenders out there, and the amount they offer differs, depending on the borrowers’ conditions. In general, lenders will provide loans for different amounts. You can qualify for thousands of dollars or just hundreds. Still, you may not qualify for any loan amount. So, what is the determining factor? You do well to ask yourself the difference between an individual who are eligible for huge loans and the one who is only eligible for a few dollars or nothing at all.

In this blog, we are going to respond to the question; simply how much loan do you qualify for. So, read to the end and see the much you can be eligible for. A word of caution, though – if you apply for a loan amount that you only need. The fact that you qualify for a huge loan does not mean that you need it, and thus you should not go it. Also, you may borrow money online in case you are in need. But try to avoid this option. Now back to the topic of interest.

In most cases, lenders cannot offer the loan amount that borrowers ask for. In general, there are some tests that a borrower has to pass before being approved for a loan. As we mentioned earlier, no fixed amount applies to all lenders.

So then let us look at the things that determine the amount of loan you can qualify for.

The Determining Factors

  1. Credit score

This is one of the most critical eligibility tools that nearly all lenders use. It is a figure established to determine the creditworthiness of borrowers primarily. Generally, credit score ranges from 300 to 850 points. Most lenders prefer loaning to individuals with at least 700 points. This figure is considered a good score and presents an applicant as a lower-risk borrower. We do not mean that if your score is lower than 700, you cannot qualify for loans. In fact, there are loans for even individuals with bad credit – that is a score of 550 points and below. The point we are making here is, with a higher score, you can qualify for huge loans. In contrast, with a bad score, one can qualify for small loans. Usually, ceilings and caps are made based on credit score.

  1. Debt-to-income ratio

Here is another critical determinant of the amount of loan you can qualify for you. This is the sum of all your regular debt payments divided by your earnings. It shows your ability to effectively manage payments monthly. In general, individuals with a very high debt to income ratio often struggle to manage their monthly obligations. In other words, a higher ratio shows that you are highly dependent on debt, and this is a bad sign. Well, different lenders may accept different ratios. But the idea here is, maintain a lower ratio, and you will easily qualify for higher loans. A low ratio is a clear indication of an effective balance between what you earn and what you owe. Nearly all lenders want to see a significant low debt to income ratio before approving loans. And now, in relation to the question we are dealing with, you can qualify for a higher loan amount with a low debt to income ratio if other variables remain constant.

  1. The type of loan

There are different types of loans out there with distinct qualifications. For instance, we have personal and business loans. Personal loans are further divided into secured and unsecured loans. Unsecured loans have stringent eligibility requirements. For instance, the emphasis is put on credit score, debt to income ratio, and proof of income, among others. If you do not meet the minimum requirements, in this case, you can hardly qualify for loans. Even if you are approved for one, it is more likely to be at a higher interest rate and harsh terms. This is because the lender bears a lot of risk in giving you a loan.

In contrast, secured loans are a bit friendly, and one can easily qualify even for large loans irrespective of the credit history and debt to income ratio, among other eligibility requirements for conventional loans. The most critical factor in this regard is the value of the asset used as security. In other words, if you are securing a loan with an asset of high value, you are more likely to qualify for a considerable loan. However, it is rare to come across a lender who can offer you a loan of up to 100% the value of the asset. In most cases, you can be given a loan of up to 80% of the value of the asset used as security. If you have sufficient equity in your home, you can as well use it to secure a loan, commonly referred to as home equity loans. This a very risky affair because you are likely to lose your home in case you fail to repay the loan.

The concept is the same in business loans, only that the business is considered rather than the owner. For instance, the assets of the business can be used to secure a loan. Perhaps you’ve heard of invoice loans, where the unpaid invoices are used to secure loans. Again, you can qualify for up to 80% of the value of your total unpaid invoices.

The lender

The type of lender you are dealing with also plays a significant role when it comes to the amount of loan you can qualify for. For instance, some lenders have specific ranges of loans they can offer. This is especially the case when small scale lenders and most online loans.

Exactly how much can you qualify for?

The answer is still the same, there is no fixed value, it depends on several factors, most of which we have discussed. However, several loan calculators take into consideration all the factors relating to a borrower and give an approximate amount eligible. But again, this applies to specific loans, such as mortgages and secured loans.

The Bottom Line

We cannot tell you with certainty the specific amount of loan you can qualify. If you want read more about payday loans by visiting they have the most affordable rates.

Just to sum up, we have discussed several factors that determine how much you can be approved for. We hope this discussion has been helpful. What can you do to improve the chances of qualifying for loans? Get the answer in our next blog. Thank you!

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