Factors that Determine How Much You Can Borrow for a Personal Loan

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Factors that Determine How Much You Can Borrow for a Personal Loan

Getting a personal loan in Singapore is easy. You do not need to pledge any collateral to get this loan. Even if you have a bad credit history, you may still qualify for a personal loan. However, the million-dollar question is how much you can borrow. Whether you are borrowing from a bank or a licensed moneylender, knowing your limits would help you plan accordingly. Typically, the maximum amount you can borrow depends on a number of factors, such as, how much you earn, your living standards, and your employment history. Here’s a close look at each factor.

Your income and ability to repay

The first thing that lenders check is your income. If you have a steady source of income, you are likely to get a personal loan. The level of your income determines your borrowing capacity. If you get a five-figure salary, you are likely to get approval for a large amount of loan. If your income level is low, you should expect a huge loan. In order to determine your ability to repay, banks and moneylenders also look at your past records. If you had a loan earlier and repaid it in a timely manner, you have a good chance of getting approval for a larger loan amount.

Employment history

Just having a steady current income may not be enough. Lenders also want to know about your sources and levels of income in the past. If you have been a salaried professional all through your life, you are a good candidate for personal loan. If you changed your profession frequently, some banks may decline your loan application. However, you can still get a loan from licensed moneylenders in Singapore. The lender will determine the amount you can borrow.

Your credit history

As mentioned, your credit history plays an important role in determining how much you can borrow. Banks are willing to borrow money to people with a good credit history. Thanks to licensed moneylenders, now you can borrow even with a bad credit score. However, a good credit score will always help you get a higher loan amount.

Your bank statement

Some lenders check your past years’ bank statement to see your transaction history. If you have been depositing and withdrawing funds regularly from your bank account over the past few years, you are a good candidate. The lender will also check how much money came to your account in the past year and the source of your funds. Some short-term loans like a payday loan may go unreported in your credit history. Your bank statement allows your lender to keep track of such short-term loans.

Other considerations

Your age is another factor that the lender may want to consider. Typically, lenders want to make sure your repayment tenure does not exceed your retirement age. You are more likely to repay on time while you are working. Banks may also want to know what you want to do with the loan amount. Even though you are free to use your personal loan amount the way you want, stating the purpose may help fetch you a larger amount, in some cases.