Calculate your personal loan borrowing power
Before you apply for your personal loan and have your application go down on your credit report, it's important to have an idea of how much you'll be able to borrow. Fortunately, you can do just that right here with Savvy by using our borrowing power calculator. All you'll need to do is fill in some simple details about the number of people applying for your loan, your income and expenses and you can find out how much you may be able to borrow. Start the process with us today and apply for your loan with more peace of mind that you'll be able to afford your repayments.
Calculate your personal loan borrowing power
How much I can borrow with a personal loan?
Personal loans can vary widely in size based on a multitude of different factors, pertaining both to the type of loan you choose and your own profile as a borrower. Some of the most significant factors that will affect your borrowing power include:
Whether you opt for a secured or unsecured personal loan will dictate what your maximum borrowing power is. Unsecured personal loans, which are the most common type of personal loan, come with borrowing ranges of $2,000 to $75,000. However, secured loans increase their minimum loan amounts to $15,000 and maximums all the way up to $100,000. This doesn’t mean you’ll always be approved for the maximum, though, as other factors will still dictate your personal borrowing power.
Your credit score
The higher your credit score, the more you’re eligible to borrow. That’s the general rule that lenders adopt when considering personal loan applications, as a strong credit rating indicates a trustworthy borrower. As a result, they’ll be more willing to lend you a greater sum of money if you have a proven track record of comfortably and efficiently servicing debt.
Your employment and income
What you earn will largely dictate the terms you’re approved for. You must be able to comfortably afford your monthly repayments to be approved for the best personal loan for your situation, so it makes sense that the more you earn, the greater the repayments you can afford to take on. Additionally, lenders want to see stability in your employment to instil greater confidence that you’ll be able to consistently afford your personal loan commitments.
Your monthly financial commitments also factor in here, however. Subtracting your expenses from your earnings on a monthly basis gives you your disposable income each month. This figure is what lenders base their assessments on, rather than solely your income. You can increase your disposable income in the leadup to your application by cutting costs where possible, which could make a difference to the amount you’re approved for.
Your preferred loan term
Whether you want to repay your loan over a short, medium or long term will inform how much your lender will be willing to approve you for. If your credit is otherwise positive, your approved loan amount is likely to be smaller if you opt for a one- or two-year term compared to a five-year term. For example, if you could only afford around $600 repayments each month, your maximum borrowing power for a two-year term may only be $13,000, compared to a $30,000 loan over five years.
The number of borrowers
If you’re utilising a co-borrower or guarantor, that will also impact your borrowing power. Both of these can increase what you would otherwise be approved for by adding extra security to the loan. A co-borrower brings a second income to the table, which increases the amount you can afford to pay combined. A guarantor is someone in a stronger financial position who guarantees the payment of the loan, giving the lender more confidence in granting you greater sums.
A common part of the personal loan application process is determining the number of dependants you have. Having kids is obviously a substantial drain on anyone’s finances, particularly if the expenses that come from taking care of them are set to increase in the coming years with school fees and other costs. Because of this, this factor will have an impact on what you’re eligible to borrow.
Will my loan’s interest rate and fees affect my borrowing power?
They can – interest and fees are two of the most important factors to compare when it comes to personal loans. These will have a major impact on the cost of the finance agreement, so it’s crucial to give them as much, if not more, weight as all the other variables which factor into your decision-making. This is because lenders will include them in their calculations. For instance, if you were able to comfortably take on a debt of $35,000, your lender may only approve you for a loan of about $30,000 due to any interest and fees charged, which cost $5,000.
There are two types of interest which can apply to your loan: fixed and variable. Fixed interest is locked in for the entirety of your loan agreement and remains the same, preventing any sort of market movement from impacting the cost of your loan. This makes it easier to budget around your loan repayments well into the future, giving you the confidence that you won’t have to pay more than what you’re contributing now. Variable interest, on the other hand, can rise or fall in line with your lender’s changes, meaning they can save you money but also run the risk of costing you more.
Additionally, there are several fees which you should always compare when considering your options with Savvy. These include the following:
- Establishment fee: $0 to $595
- Ongoing monthly fee: $0 to $10
- Early repayment fee: dependent upon the size of loan and time left to run (can cost $600 or more)
- Late repayment fee: $15 to $35 per late repayment and recurring if the payment isn’t made
One way to effectively compare interest and fees at the same time is to look at your loan’s comparison rate. This is a percentage figure which incorporates both your loan’s rate and its various fees to give you a more accurate representation of the true cost of the loan. While it does include things like your establishment and ongoing charges, early and late fees aren’t guaranteed to occur, so they aren’t included in this calculation.
Types of personal loan
With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.
Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.
Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.
Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.
If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.
Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.
There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.
Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.
Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.
There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.
Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.
Why compare personal loans through Savvy?
Common personal loan borrowing power questions
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.