Generally, you can borrow an amount from $1,000 – $40,000 through a personal loan. It is true that some lenders would issue a bigger loan but they have stricter requirements in evaluating such applications. When you apply for a loan amount, the lender will want to know what you are going to do with the funds. Therefore, when you fill in the application form, make sure to state the home improvement project that you want to fund clearly.
The lender will also check your credit score. If you want your personal loan to quickly approve, you must have a credit score of at least 640 or above. The lower your credit rating, the higher the interest rate you must pay. Your current income will determine the amount they are willing to approve. The lender will also check whether you have other debts when you apply the loan. Some lenders will limit the amount you can borrow if you already have other existing debts.
Before shopping for a loan, you should take a look at your book keeping ledger to find out how much you are spending on your living expenses. You can flip through your book keeping ledger up to 6 months – 1 year before. When you get a rough idea on how much you spend every month, you can use a calculator to calculate how much income you have left after deducting the living expenses. As a rule of thumb, your income must be 3 times more than the monthly amount that you have decided to pay.
You can take a few actions to improve your credit report if you are hoping to get as much of the loan amount to approve. For example, you can start to get into the habit of making payment for your bills on time to improve your credit score. As you pay down your debt, you will be able to reduce your debt to income ratio. Ideally, your debt to income ratio should be lesser than 36%.
If you don’t have a job now, you can get one and apply the loan after working for 6 months. This will prove to the lender that you are financially stable and capable of making the monthly repayment. If you cannot qualify for an unsecured loan, you can consider using a collateral to get a secured loan.
When you sign up online, you have the opportunity to get pre-approved first. To get preapproved, you only have to fill in a simple form that ask some basic information about your income, employment and personal information. If you are preapproved, they will approve your loan faster afterwards. They will ask you to choose a repayment schedule. Those can afford paying more every month should do so by selecting a shorter repayment schedule.
