When it comes to borrowing money, the first thought for many of us will be, how much can I borrow?
Maybe you want to fund a large purchase, consolidate existing debts or even boost your credit score. Whatever the reason, it’s important to have all the information when looking for the best personal loan to suit your needs.
In this complete guide to borrowing and loan amounts, we’ll dig into the details of how much you’re eligible to borrow, how to calculate what you can afford and how to decide what’s best for you.
How much money can I borrow?
Right then, you’re probably wondering, how much money can I borrow? Well, the amount you can borrow will depend on your individual circumstances and the eligibility criteria of the lender. We’ll dig into the eligibility criteria in more detail further on.
If you already know how much you are thinking of borrowing, you can read our detailed guides on some of the most popular loan amounts.
If you’re not sure of how much you need to borrow, it might help to write down all the things you need to cover and their price, including any additional fees. Then total the amount up, allowing for any additional expenses that may come up. Just remember not to borrow more than you need, as you’ll need to pay it all back with interest.
How can I borrow instantly online?
It’s no longer necessary to physically go to a lender and apply. As a broker, we search a number of lenders online based on your needs and suggest the best options for you.
The process of applying for and receiving a loan online will often be very quick and efficient.
If you’re looking to borrow money instantly online, simply head to our eligibility checker to start comparing deals right away.
How much will borrowing cost me?
The total cost of borrowing at the end of your agreement will generally be based on the following factors:
- How much money you borrowed
- The length of time over which the debt was repaid
- The amount of interest that was applied to the remaining debt over time
- Any additional fees that were incurred in the process
Before we go any further, let’s dig into each of these and what they actually mean.
How much money you borrowed
This is simply the original loan amount. So if, for example, you took out a loan of £10,000, then this would be the amount borrowed.
The length of time over which the debt was repaid
Also referred to as the “repayment term” or “repayment schedule”, this can vary based on the amount borrowed, but will often be a number of months or years.
Why is this relevant? Simply put, the more time you spend repaying the loan, the more interest will be applied to the amount still owed. So a loan with a shorter repayment term would typically cost less than one with the same interest rate, spread over a longer period.
This brings us onto our next item: interest rates.
The interest rate or APR
An interest rate is a percentage of the outstanding debt, which is added to the debt at set intervals, for as long as it is unpaid. For most personal loans, interest rates will typically be “fixed”, meaning they do not change over time.
Some lenders might instead use an annual percentage rate, or “APR”, as a way of showing the interest rate on a particular loan. The difference between APR and an interest rate is that APR factors in additional costs associated with the loan. If there are no additional fees, then the APR would be the same as the interest rate.
The purpose of the APR is to give you a clearer picture of what the loan will actually cost you, taking all fees into account.
Many lenders will charge additional fees for services they provide, or for breaches of the agreement, such as missing repayment dates.
Typical examples of additional fees might include:
- Arrangement fee – Sometimes called an origination, booking or completion fee. A fee charged by the lender for processing and setting up the personal loan.
- Late repayment fee – A fee applied when a repayment deadline is missed.
- Early repayment charge – In some cases, lenders may apply a charge for repaying the loan earlier than the original repayment term.
Am I eligible to borrow?
Your eligibility to borrow will come down to the individual lender’s criteria.
This will often vary, depending on a few factors. Some common examples include:
- Your credit history or credit score;
- Your income;
- Your debt to income ratio (the amount that you already pay towards debts);
- Loan purpose (such as getting married, or home renovations).
If you’re concerned that you could be turned down for a loan and worried about your eligibility based on these criteria, don’t worry, alternative options are available.
For example, you can apply for a loan with a guarantor, a friend or family member who would then be responsible for any missed payments or complications.
How do I apply to borrow money online?
The easiest way to check whether you are eligible is to use our free personal loan eligibility checker. This will help you find the deals you’re eligible for, based on your information.
Our service uses a “soft search”, meaning you can browse eligible deals and find the best one for your needs, without impacting your credit score.
Once you find an offer that you like, you can then proceed to apply with the lender you’ve chosen.
What happens if I am approved?
If your loan application is approved, you will be presented with an agreement from the lender that includes:
- The loan amount;
- The repayment schedule, or term;
- The interest rate, or APR;
- Details around any additional charges;
- The total value you will have repaid at the end of the agreement, based on your repayment schedule, the interest rate and any fees.
If you are happy with the terms and you are certain that you will be able to meet the repayments, then you can accept. You will often get the money sent to your account the same day, upon agreement.
Start comparing personal loans today
Head over to our eligibility checker to see how much you’re able to borrow and find the right loan for your needs.