How Much Can I Borrow?

Factors that affect the amount of money you can borrow

Here are some of the most important factors to consider when determining how much you can borrow.

Your credit score

A lot of people pay little to no attention to their credit scores. However, most financial institutions pay a lot of attention to your credit score status. A poor credit score rating is likely to make you a risky customer, which is why in most cases, you will end up having your loan application denied. On rare occasions, you may be approved for a personal loan but with a limited amount of money.

Some of the things that affect your credit score are constant failure to meet your obligations in terms of loan repayment, late utility bill payments and your behaviour in terms of credit usage. To ensure your credit score is impressive, strive to pay all your bills within the stipulated time. Avoid taking out too many loans that end up becoming burdensome for you to pay.

Remember that a positive credit score is likely to attract a higher loan amount, while a poor credit score may lead to your request being declined or your borrowing limit being set to just a small amount of money.

Credit history

Your history in terms of credit usage is another factor that may determine how much money you can borrow moving forward. Money lenders often review your history to find out if there are any red flags. For instance, numerous loan applications that are declined can be an indication that you are a high-risk client. 

Generally, if the lender notices that you have made numerous requests for a credit line, mortgage or loan, chances are that you may not be the best person to trust with a lot of money. In such a case, the lender may either decline your loan request or approve your request but set a low limit in terms of the money you can borrow at any given time.

Debt-to-income-ratio

Your debt to income ratio can help any lender determine if you can make loan repayments according to the laid down terms. Your debt to income ratio is calculated by taking the sum of your monthly debt payments and dividing it by your gross monthly income. At the end of the day, lenders prefer working with individuals whose percentage falls between 28% and 36%. 

At such a rate, the bank or money lender is confident enough that you will be repaying your debt without struggling or defaulting. If your debt to income ratio is somewhere above the 36% range, your loan request may either be declined, or you will only be able to receive a loan offer with a small amount of money.

Employment history 

Your employment history is another parameter that may help a money lender determine if you are good enough to borrow a huge sum of money or not. Most institutions consider your employment history over the past three years. This allows them to understand how stable and reliable you are when it comes to keeping a job.

A borrower that has held the same job for at least one or two years is a relatively low-risk individual and may therefore qualify to borrow a huge sum of money. On the other hand, a borrower that has only been employed recently may only qualify for a small amount. One who has been employed by different employers over a short period of time is a high-risk client and may therefore qualify for a small sum of money in the form of a cash loan.

Down payment 

A lot of financial institutions prefer working with people who have a genuine savings account. In such an account, you should ideally demonstrate your ability to make and save money. The same rule applies to your ability to make down payments when taking out a loan. Say, purchase property or a vehicle. 

If you have 20% of the money required to make a down payment, then the particular financial institution will be more than willing to lend you more. On the other hand, if you do not have a genuine savings account and lack the ability to make a down payment, your money lender may only be willing to give a small loan amount.

Loan type and loan term

Money lending institutions often review each borrower’s application to determine which type of loan is the most ideal. You can go for personal loans, online loans, short term loans, car loans, secured loans and unsecured loans. 

The type of loan you are eligible for determines how much money you can borrow. For example, an unsecured personal loan may provide you with enough money to pay for school fees, foot your wedding bills or even go on a vacation. On the other hand, a secured loan may be the ideal option for someone with a bad credit history but wants to borrow a large sum of money.

Some loans may have a clause that allows you to make lump sum repayments with the benefit of paying low rates, while others require you to make periodic instalments. Ozzie Loans often schedules its loan repayments to coincide with the day when the customer gets their regular income. This enables you to make repayments on time and without feeling too pressured to do so.

Borrow money from Ozzie Loans

Ozzie Loans is a reputable no paperwork loans provider that works hand in hand with clients to achieve the best possible goals when it comes to financial solutions. At Ozzie Loans, you can expect to work with a team of professionals who are friendly and skilled enough to help you find easy finance solutions to any financial difficulties you may be facing.