When you are in need of money, the first thing you might think of is borrowing it from a friend or family member. But what if they can’t help you? Or what if you need more money than they can give you? That’s when you might want to consider borrowing from a bank or loan company like Cashify Loans. However, the age-old question regards the amount that you can borrow.
The answer to this question depends on your financial situation. Generally speaking, the more money you make in terms of salary, the more you will be able to borrow. On the other hand, if your credit score is low then you may not be able to borrow as much as someone with a better credit score. With this in mind, we’ve listed some considerations that will affect your ability to borrow:
Your Income
As we said in the introduction – the more money you make, the more money you can borrow. This is because lenders use your income as an indication of how likely you are to be able to pay back the loan in full and on time. If you earn a high salary, you have a much better chance of being approved for a loan in the first place because you have access to higher amounts of cash.
Your Credit Score
As well as income, your credit score is also taken into account when you apply for a loan. Lenders use your credit score to determine how reliable you are at making payments. The higher your credit score, the more likely you are to be approved for a loan. In Australia, the credit score range is from 0 to 1200, with a higher number indicating that you are more reliable than someone who has a lower number.
If you’re unaware of your credit score, you should request a free copy of your credit report online. This will help you to understand what lenders are looking for when they check your credit history, such as whether you have a history of paying bills on time and whether you’ve defaulted on any previous loans.
The Lender
You must always choose a responsible lender when taking out a loan. A responsible lender will ensure that you can afford the loan, and will not lend more than you can safely manage.
When assessing how much money you can borrow, lenders consider your credit score and existing financial commitments such as any other loans or credit cards. They may also look at your income and employment history. To find out how much money you can borrow, it’s important to shop around and compare different lenders, as each one will have different requirements.
Employment History
As we’ve just alluded to, lenders will look at your employment history when assessing how much money you can borrow. It’s important to ensure that all of your information is accurate and up to date, so it’s best to double-check all the details before you apply for a loan. Lenders want to be sure that you’re able to pay back the loan in full, so a steady employment history can help demonstrate this.
Loan Type
Finally, the type of loan you apply for will also affect how much money you can borrow. For instance, secured loans generally have higher borrowing limits than unsecured loans. Secured loans are backed by an asset, such as a vehicle or property, so lenders are more likely to offer higher borrowing limits than on unsecured loans.
It is also important to assess how much money you need to borrow, as this can help you determine the type of loan that is best suited to your needs. For instance, you can choose a specific holiday loan or medical loan.
