When you wind up needing money for one thing or another, one of the solutions that will be staring right in your face is the possibility of getting a loan. Depending on what you need the money for, though, you may be unsure of the highest amount you can actually get, as well as of the lånebeløp, i.e. the amount that you should get. Those are the questions that will be bothering you, and you’ll have to get your answers before embarking on the journey of applying for a loan at all. So, how about you get those answers right away?
What’s The Highest Amount You Can Get With A Consumer Loan?
People usually don’t have the right idea when it comes to the maximum amount they can get with a consumer loan. This leads to them being surprised after seeing the lender’s offer, either because they’ve expected a lower or a higher number. Most often, the number they’ve expected is higher, which can get those people frustrated and nervous, because the funding solution they wanted to use had been deemed impossible. That rarely happens, though, but it does happen, which is why getting familiar with the maks lånebeløp is necessary.
If you’re expecting me to simply tell you a specific number and be done with this, your expectations are very wrong. The max amount is not the same for every person, and that’s the first thing to learn here. So, your specific situation affects the amount you’ll be able to get, which is a good thing, because you’re the one who has control over that situation, meaning you can change it for the better if necessary. We can’t talk about any kinds of changes, though, if you don’t even know which factors influence that maximum consumer loan amount.
Factors That Influence The Maximum Amount
Since it’s impossible for you to try and make any changes unless you understand the factors, it’s time to understand the factors. I’ll list some of the crucial ones for you below, but remember that specific lenders may impose specific criteria of their own, and those are not to be taken for granted, ever. Even so, there are some common factors that always influence the maximum amount, so let’s check them out.
Your creditworthiness, i.e. the actual extent to which you’re deemed suitable for a loan, which is based on your reliability of repaying past debts, is the first factor that has an impact on this particular amount. Lenders won’t offer the same max number to people they find creditworthy and to those they find not creditworthy, which is completely logical. These companies earn this way, and they don’t want to risk losses by extending a huge loan to an individual who has had issues repaying debts in the past. Sometimes, not being creditworthy means that you won’t be eligible for a loan at all, apart from the fact that it can impact the maximum amount you’ll be able to get.
- Loan Length
The length of the loan also has an impact on this. For instance, you could be extended a larger loan if you go for a longer repayment period. The lender will calculate the monthly amount that you can burden your income. They won’t go over that amount, but the length of the repayment period can actually make you eligible for a higher amount, because you’ll be paying the same monthly installment, just for a longer period of time.
- Debt-to-income Ratio
Since I’ve mentioned the monthly installment that you can be burdened with, let me tell you about the connected factor that the lenders will check to determine that. Basically, they’ll check your debt-to-income ratio, because it is what influences the decision on what your highest monthly installment can be. Consequently, it influences their decision on the amount of money you can borrow.
Whether or not collateral is involved will also undeniably have an impact on this number. Secured loans, i.e. those requiring collateral, will usually have a higher maximum. Unsecured ones, however, are often short term and small. Those can be a great solution for people who don’t want to be in debt for a long time and who can cover their expenses with a smaller amount.
- Other Lender Imposed Criteria
As I’ve briefly mentioned previously, the lenders will have their own, specific criteria to impose on you when you’re applying for a loan. Those criteria, including your credit score, your financial profile, and your character as well, will also have a say in how much money you’ll be able to borrow. So, make sure to be aware of those criteria as well, because, just like with creditworthiness, you can work towards improving your situation and thus meeting the imposed criteria.
How Much Should You Actually Get?
You now understand that the maximum loan amount depends on multiple factors and that there’s no one answer to that question for everyone. It is your specific situation that influences this, but when you contact a few lenders, you’ll get an idea as to how much you can borrow from each of them, meaning that their criteria play a huge role here as well. Should you always go for the maximum, though, or should you think things through first and perhaps go for a smaller loan if that’s a possibility? Well, the answer should be clear.
Going for the maximum if that’s not absolutely necessary is, well, unnecessary. You won’t be getting a loan just so that you can get a loan, because getting in debt without having a good reason for it is not the wisest move. Since you do have a reason for it, you will also have an idea about how much money you actually need. Going extensively over the amount you need will only get you in an unnecessary debt, and you’ll regret such a decision afterwards. So, you should be smarter than that and play this the right way.
The right way, of course, isn’t borrowing less than you need, because that won’t get you anywhere either. You’ll just wind up equally unable to fund what you wanted to fund, but now you’ll have a new debt hovering over your head. So, the point is that you should determine the exact amount of money you need and borrow that one, if it is under the acceptable maximum that the lender will impose. There’s nothing wrong, though, in borrowing slightly more just in case you haven’t done the calculations correctly, but going overboard is not the best thing. Finding the right balance is important, because paying more interest than necessary is not in your favor.