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What is the maximum amount I can borrow on a personal loan?

What is the maximum amount I can borrow on a personal loan?

Whether you’re paying for home renovations or need to consolidate debt, if you’re in need of a large lump sum you may be considering taking out a personal loan. Whatever your reason, you may be curious as to how much you can request to borrow and the maximum amount a lender would give you.

What you may be able to request from a personal loan lender will depend on several factors, including your personal financial situation, the personal loan type, and the purpose of the loan.

Let’s explore the maximum amount you may be able to borrow on a personal loan, and how lenders determine whether you qualify to do so.

How much can you borrow with a personal loan?

Unlike a home loan, you don’t need to apply and wait to see what loan amount the lender approves you for. Personal loans allow you to request the exact amount of funds you need.

When you apply for a personal loan, you’ll nominate the amount of money you want, which is generally capped between $5,000 and $60,000. This maximum amount is where Australian personal loan lenders tend to cap the maximum amount you can borrow, whether you apply with a small lender or a big four bank.

However, this does not mean you’ll be approved for the amount you request. Personal loan lenders must adhere to strict regulations that help to prevent everyday Aussies from taking on too much debt and being unable to repay it.

These regulations influence the eligibility criteria set by the lender, which may include:

  • Having a good to excellent credit history
  • Being an Australian citizen or permanent resident
  • Having acceptable identification (Australian passport or driver’s licence)
  • Earning a minimum income set by the lender
  • Being employed and not in probation
  • Potentially securing the loan with an asset to reduce the risk of default

Within each category, there are different outcomes that may present your personal loan application as less risky and therefore boost your chances of approval for a large loan amount.

For example, being employed full-time for 1-2 years may showcase a greater level of financial stability in your application than if you were casually employed for a few months. The former indicates you may be receiving a higher, regular income and may be better prepared to repay the loan.

What else impacts the maximum loan amount?

It’s not just your personal financial situation and application that may impact whether a personal loan lender will let you borrow the maximum amount on a personal loan. It may also come down to the loan purpose and loan type.

As mentioned above, personal loan lenders in Australia generally cap the maximum borrowing limit at $50,000-$60,000. However, the purpose of the personal loan and whether its secured or unsecured may determine whether you can request more funds.

For example, a car loan may allow you to gain approval for a higher loan amount, depending on the lender. Westpac currently* offers a car loan with a maximum loan amount of $100,000. Getting approved for the full $100,000 may depend on the age of the car, make and model, as well as well as factors like your personal financial situation.

Further, Greater Bank currently* offers a secured personal loan with a maximum loan amount of $100,000. Now Finance also* offers borrowers the ability to apply for a secured personal loan up to $100,000, with its unsecured personal loan amount capping at $50,000.

This may indicate that securing a personal loan against an asset, like a car, or even jewellery and art, may help to boost your chances of being approved for a higher loan amount, compared to unsecured personal loans.

*Product information accurate as of 23.07.2021.

Can I calculate how much I can borrow with a personal loan?

If you’re interested in discovering how much you may be able to borrow, consider using our RateCity Personal Loan Borrowing Power Calculator.

You’ll just need to enter in some information, such as the amount you want to repay, the repayment frequency and your credit score, and the calculator may help to determine your estimated borrowing power.

Be realistic with your budget and take stock of what you can afford to repay each week, month, or fortnight. The Borrowing Power Calculator may then help to determine what the maximum personal loan amount is that you can responsibly afford.

Whatever your personal loan purpose is, keep in mind that the greater loan amount you request, the higher your ongoing repayments may be. Even if you nab a low-rate personal loan, the interest charged on a larger loan amount may add up compared to borrowing a smaller amount with a higher rate. Be sure to calculate the cost of interest repayments on your large personal loan before applying to ensure you can afford repayments.

Did you find this helpful? Why not share this article?

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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Learn more about personal loans

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can I include my spouse’s income on a personal loan?

If you apply for a joint personal loan with your spouse, you can include their income on the application. If approved, they then become jointly liable for the loan.

Both you and your spouse need to meet the eligibility criteria, such as income, age, and residency requirements, as stipulated by the lender. A joint loan could increase your chance of approval for a higher amount, as both borrowers’ incomes are assessed when determining borrowing capacity. 

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.