How Much Can I Borrow Personal Loan?

How much can I borrow personal loan is a common search term for people wondering what their borrowing power is. Monzi is here to explore what can affect your borrowing power.

How much can I borrow personal loan?

The amount of money you’re eligible for is known as your borrowing power. Moreover, lenders assess your application to find out how much they can offer. Lenders take a variety of factors into consideration when assessing your application, including your:

  • income
  • expenses
  • other debts
  • credit history
  • etc.

We’ll explore a number of these criteria below.

Income

Lenders take your income into account when assessing you. Obviously, credit providers look to make sure you will reasonably be able to afford the loan.

In addition, lenders are bound by Australian law to:

  • make inquiries into your financial situation;
  • take steps to confirm your financial situation; and
  • make a decision whether or not the loan product is suitable.

How much can I borrow personal loan – expenses

Banks and other lenders will consider your living expenses. One thing to note, however, is that lenders may see your expenses as a whole. There are some expenses that may not be obvious.

For example, remember to factor in the following when calculating your expenses:

  • Rent. Includes board
  • Personal items. Includes things like footwear and other clothing, as well as cosmetics, apparel and hygiene products etc.
  • Education. Any costs spent on private or state education, including uniforms, laptops etc.
  • Food and groceries. Household groceries including meat, vegetables, coffee, tea, milk and toiletries.
  • Insurance. All your insurance policies, like health, home and contents, life, income etc.
  • Transport. Includes public transport like trains, trams, buses or even Uber. Furthermore, you should include the costs on your own car, like registration, petrol and maintenance etc.
  • Investment property. Utilities, rates, body corporate fees, tax levies etc.
  • Childcare. Daycare fees, after school care fees etc.
  • Medical expenses. GPs, surgeries, medicine, specialists etc.
  • Leisure. Any leisure activities like tickets to gigs, nights out, comedy, cinema tickets etc.
  • Pets. Includes things like vet bills, pet food, toys and other related expenses.

How much can I borrow personal loan – dependents

The number of people dependent on you naturally ties into your expenses; it doesn’t take a genius to work out why.

Put it this way, someone with zero dependents is free to use all their disposable income on themselves. On the other hand, a parent with three dependents is likely to have a much tighter budget.

In short, the more dependents you have, the higher your commitments are. This lowers your disposable income.

Other debt

Do you have any other debts? Again, debts are another commitment lenders factor in. The more debt, the less disposable income you have.

Examples of debts include:

  • credit cards
  • other personal loans
  • payday loans
  • car loans
  • home loan.

Keep in mind, lenders may take your credit cards into account, regardless of whether or not you use them.

If you have multiple existing debts, it may be worth considering a consolidation loan. A consolidation loan, as the name suggests, combines your existing debts into one payment. You may, in addition, even save on interest over the life of your loan.

Relationship status

Certain lenders may be able to offer joint personal loans. In this situation, if you and your partner’s income is deposited into a joint account, your combined income will be assessed.

On the other hand, personal loan lenders may not always be able to offer joint credit. Therefore, if you and your partner’s income is deposited into the same account, only the applicant’s income will be assessed.

How much can I borrow personal loan hand throwing rock blue background

Employment – how much can I borrow personal loan?

Lenders, as a general rule, look for consistency. Therefore, it doesn’t take a genius to realise that the key to consistent income is stable employment.

Moreover, lenders consider things like the length of your employment, as well as the occupation itself. As a result, certain occupations may encounter more scrutiny than others. This includes income sources such as:

  • Ride-sharing services
  • Food-delivery services
  • Airtasker
  • Airbnb.

Credit score

Your credit score is a snapshot of the information in your credit report. Moreover, lenders consider your score to help them decide whether or not to make an offer.

Depending on the credit reporting agency, your score will either be between zero and 1,000 or zero and 1,200. In short, the higher your score the better.

You are able to get your credit score for free from a number of online providers. A quick Google search will bring up a number of results.

As we have mentioned, your credit score is a snapshot of the information in your credit report. But, what is actually included in your report?

Your credit report contains your personal information, like your name, date of birth, current and past addresses etc. In addition, your report will contain the following information:

  • Details of each credit product you’ve held over the past two years. Includes things like the type of credit product, the provider and opening and closing dates etc.
  • Details of your repayment history. Includes the amount, when the repayment was made and how often you paid by the correct date.

How much can I borrow personal loan – what to remember

The thing to remember about your borrowing power is that lenders consider everything above. Moreover, the above information works together to paint a picture of your borrowing power.

In other words, each of the above indicators is a piece of the puzzle. Lenders use all pieces of the puzzle to figure out whether to lend you money or not.

In addition, keep in mind that lenders can vary just as much as consumers. Personal loans from a bank, for example, will often have stricter assessment criteria than a lender offering bad credit loans.

Monzi personal loans

Monzi may be able to match you with a lender offering personal loans. While we ourselves cannot tell you what your borrowing power is, we may be able to match you with a lender offering up to $10,000.

LoanAmount
Small loans$300 to $2,000
Medium loans$2,001 to $4,600
Large loans$5,000 to $10,000

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Factor In

Costs

Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.