This is the starting question when considering borrowing money. How much can I borrow determines how much I can spend. It is good to realize that there is no standard answer to the question of how much money you can borrow. Each lender has different amounts for this. Some specialize in short-term loans , others only make long-term loans. The heights vary considerably. Nevertheless, there are a number of factors that can give an indication of the amount.
How much can I borrow? Factors that influence
All factors that a bank looks at have to do with that one question: can the borrower repay the money (on time) ? That is different for every person. To begin with, people look at the level of your income. This makes sense, because the more you earn, the greater the chance that you can repay the loan. With a higher salary you can get more money.
Furthermore, one looks at the current debt burden. If you have borrowed money before, or if there is a debt still outstanding somewhere, then people are not inclined to make some money available to you. Linked to this is the demand for the credit history.
Have you ever borrowed money in the past? Did you pay that back neatly? If so, a financial institution is more willing to provide a (higher) loan. The duration is important. The maximum loan amounts are lower with a shorter term, because repayments must be made faster.
It may even be that a bank charges different interest rates for different people. The person with less risk has a lower interest rate than someone they doubt can make the money back.
The refusal of a lender to make a large amount available is a time to think about the loan to yourself. Is the bank right if it thinks there is too high a risk? Do I not think too easily about repaying? You should avoid running into debts that can haunt you for years because they will ever have to be paid off again. In fact, a refusal is a protection for yourself from being over-indebted.
Request multiple quotes
Many banks and financial institutions give an indication online of how much you can borrow. You do this by briefly entering a few details. The indication is not definitive. The lender first wants to have all the data in and only then comes with a definitive offer.
As mentioned, even the interest can deviate from the interest indicated on the website. Mortgage interest rates are fixed, but those of personal loans are not.
It always makes sense to request multiple quotes. It may be that another bank has a better offer than it appears at first sight. At a first indication, the temptation is great to take up the offer where you can borrow the most. In practice, however, this does not have to be the best loan.
Always read the conditions for quotations. It may be that you can borrow more, but with worse conditions. In the end, you don't get any better. In the end, the question is not how much can I borrow, but how great the financial burden is that I can bear.