How Big of a Personal Loan Can I Get — and Afford?

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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“How big of a loan can I get?”

When it comes to getting a loan for things like a car or home, the guidelines on what’s affordable to borrow are relatively clear.

But for unsecured personal loans, the situation is often murkier. That’s because it’s harder to figure out how much of a personal loan you can really afford.

A good first step is to look at your financial situation. However, there are some others questions you might need to consider before you can fully answer that.

Here’s what you need to figure out to keep your personal loan affordable.

How big of a loan can I get?

One way to figure out how much you can afford to borrow is to apply for a personal loan.

After all, it’s in the lender’s best interest to limit your loan to what is affordable. This limits the lender’s risk of losing money.

“From the lender’s view, your application should show your ability to comfortably make the monthly payment—whether that’s $250 or $750 per month,” says Michael Foley, Credit Officer, Personal Loans for online lender Earnest.

“The lender wants to ensure you’ll be able to make your payments in a timely fashion and that you will still have a cushion in your budget so you can weather other unforeseen expenses or additional debt,” adds Foley.

That’s where the loan approval and verification process comes into play.

A lender verifies and weighs various factors before approving your loan request. These factors include your income, other debts you hold or are repaying, and other monthly expenses.

The lender then uses that information to determine what would be an affordable loan principal for your finances.

Keep in mind, however, that “what you might consider ‘affordable’ might be slightly different than the lender’s definition,” Foley explains.

Essentially, it’s possible you could be approved for a much higher loan than you’ve perhaps budgeted for.

How much can I afford to pay each month?

At the end of the day, this a question only you can answer. A big factor to consider is your own disposable income and money management skills.

Your disposable income is the portion of your take-home pay that is left over after you cover all necessary living expenses. Or, as lenders call it, your “monthly free cash flow after taxes and other fixed obligations,” Foley says.

Ultimately, you decide how much of your disposable income you can devote to repaying a personal loan. For some people that could be as much as half. For others, it could be much less.

Once you’ve come up with the dollar amount you would be willing to pay each month, you can plug that monthly payment into a calculator. This can tell you how much of a principal you could get based on your desired monthly payment, repayment period, and interest rate.

How much do I make each month?

How much you earn each month will directly affect how big of a personal loan you can afford or be approved for. After all, you can only repay your debts with the money you earn.

“A typical approved applicant will have total unsecured debt of less than 30 percent of gross annual income,” says Foley.

So if you have a $50,000 annual salary, for instance, a $15,000 personal loan would be considered affordable.

If you already have other unsecured debts, however, you’ll need to take that into consideration.

Credit cards and student loans are some of the most common forms of unsecured debt. And if you’re already carrying a balance on these debt types, you might have less room to take out a new unsecured personal loan.

What is my debt-to-income ratio?

Another way to figure out how much personal loan you can afford is to consider the debts you’re already repaying.

Before deciding how much to lend you, lenders often compare the amount of your overall debt to your income. This is also known as your debt-to-income (DTI) ratio.

“Affordability may vary depending on total debt obligations such as your student loans, auto loan or mortgage, other fixed expenses, and requested loan term,” Foley explains.

Figuring out your debt to income ratio is pretty straightforward.

Divide your total monthly debt payments by your gross monthly income. Your monthly debt payments should include student loans, car loan, mortgage, credit cards, and any other debts.

So what is a favorable DTI?

“Affordability is viewed in the context of an applicant’s entire profile and may vary case-by-case,” Foley says. “Generally applicants with a debt-to-income of  less than 50% will have a higher chance of approval.”

What is my credit score?

Your credit score doesn’t directly affect how affordable a loan is. However, it does show how responsible you are with debts.

“In general, lenders want to see that applicants are using credit responsibly and are not overextending themselves,” Foley says.

Some “indicators” lenders look out for, according to Foley, may include “high credit card balances, recent delinquencies, or high DTI.”

If you’ve missed payments or had delinquent accounts in the past, those are big red flags to lenders. And it could be a sign that you need to pay more attention to your finances and develop healthier money management.

Some lenders are flexible when it comes to the credit scores of borrowers. For instance, Pave has a minimum credit score under 700 for personal loan applicants.

Other lenders like SoFi don’t have a minimum FICO score for personal loan borrowers. However, applicants with SoFi typically have a score of 680 or higher.

Start a SoFi Application Today

Would this loan stretch my finances thin?

At the end of the day, no lender will have the same up-close view of your finances that you will. Or be able to answer your question “how big of a loan can I get?” Only you can truly determine whether a loan will stretch your finances too thin.

Even if you’re not at risk of missing payments, a personal loan might not be affordable if it keeps you from saving money or working toward other financial goals.

“When seeking a personal loan, potential borrowers should not be calculating the maximum possible payment they can afford,” Foley points out.

Instead, Foley recommends that borrowers should consider “the principal and payment amount that they can live with while still comfortably meeting existing debt obligations and being prepared for a rainy day.”

“It is important to leave some cushion,” adds Foley.

On top of considering what you can afford, limit how much you borrow to what you actually need.

“Requesting just the amount you need will put less strain on your finances and increase your chances of approval,” Foley says.

Interested in a personal loan?

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Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 20.01%1 $5,000 to $100,000
6.14% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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NMLS #1136: Terms & Conditions Apply
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 20.01% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 15, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 4.93% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

Published in Budgeting & Expenses, Credit & Debt, Loans