How Much Can I Borrow for a Personal Loan?

Personal loans can help you access needed cash without collateral.

Personal loans get their name because they depend solely on the person applying for the loan. Your financial institution will take several factors into consideration when determining how much they will lend. It's important to maintain a healthy personal credit profile in case you need some money in a hurry. Considering a few facts about your situation from your banker's point of view will help you determine how much to request and how much you can expect to borrow.

No Collateral

While financial institutions care about the value of the asset in the case of auto or home loans, a personal loan is unsecured, which is another way of saying that no collateral is required. If you are unable to pay the loan, the lender will not have an asset to repossess in order to recover their losses. Because of this increased risk, a lender is less likely to approve as much as a secured loan. In some conservative financial institutions, the maximum typically approved for this type of loan is around $20,000, though you may be approved for much more or less depending on the bank and other personal factors.

Interest Rate

Because a personal loan doesn't involve collateral, it typically will have a higher interest rate than other loans. While this is the case, your personal credit history directly affects if you will be approved and your interest rate. Furthermore, it will be a primary factor in determining the amount you may borrow. A credit score above 720 is considered excellent and will give you the best chance of borrowing a larger amount of money.


When requesting a loan amount, a lender looks closely at your income. The ratio of your monthly post-tax income and the sum of all your debts, including the monthly payment of your new personal loan, will determine how much you can borrow. If the ratio is too high, you may need to request a lower amount. Put simply, the more you make, the more you can borrow. If you do not have enough income to get approved, consider a co-applicant that can supplement your income.


If you are concerned that your credit profile may prevent you from obtaining your requested amount, be prepared to discuss a counteroffer with your banker. In many circumstances, you must request a specific amount for a loan. If you are declined, ask if you can be approved for a lower amount. For instance, a lender may decline you for $15,000, but may be willing to lend $10,000. Occasionally, they may make a counteroffer contingent on other requirements, such as the closure of credit cards or satisfaction of other loans.


Some people are surprised at how difficult it can be to obtain a personal loan for more than a few thousand dollars. If this is the case, you have some alternatives. If you have a healthy credit score but lower income, you likely receive credit card offers on a regular basis. These may have high limits that will meet your immediate needs, however they also may have high interest rates and steep penalties for late payments. Borrowing from friends or family may also be an option, however be sure to create a simple contract to prevent future problems.