Personal loans: How much can I borrow?

You can apply for up to £35,000 with Novuna Personal Finance. However, the amount you’re eligible to borrow will depend on several factors, including your personal circumstances, credit history and affordability.

Maximum personal loan amount

Different lenders offer varying loan amounts, but personal loans usually range from £1,000 to £25,000.

The maximum amount you’re likely to find from reputable lenders in the UK is around £50,000. However, this is likely to be only offered by banks to existing customers. At Novuna Personal Finance, you can apply for a maximum of £35,000, which is higher than many competing lenders.

A lender’s maximum amount doesn’t determine how much you will personally be accepted for, though. The amount you’ll be permitted to borrow depends on how long you want to take out a loan out for, your ability to handle additional debt and the way you’ve managed money in the past. You are more likely to be accepted for a higher loan amount if you have a good credit history and strong affordability.

Minimum personal loan amount

The minimum personal loan amount is usually around £1,000.

Lenders typically set a minimum loan amount to ensure they can cover the cost of servicing their loans. Small loans often generate less money compared to larger loans, and so you’ll commonly see lenders set a minimum loan amount to ensure they can continue offering competitive interest rates.

Some other financial products, such as payday loans, might allow customers to borrow smaller amounts. That’s because the high interest rates offset the cost of servicing the loan. So, while you’ll be able to borrow a smaller amount, you’ll almost certainly be paying handsomely for the privilege.

Another borrowing option may be a credit card, which allows you to borrow indefinitely up to a maximum credit limit. Do be aware, though, that you may incur high interest charges if you don’t pay off your full balance by the end of the month. Our guide on the difference between credit cards and personal loans goes into more detail.

How to qualify for a personal loan

Lenders assess a variety of factors when deciding whether to accept your application, including your personal and financial circumstances, creditworthiness and affordability.

Lenders look at the likelihood of you repaying what you owe, and how the monthly repayments might impact your finances.

You may think it’s easier to get approved for a small loan. While it’s true that a smaller loan will have less of an impact on your debt-to-income ratio, your lender still needs to ascertain the likelihood of you keeping up with your monthly repayments. A smaller loan repaid over a short timeframe might have similar monthly repayments compared to a larger loan spread over a longer period, for example.

So, instead of getting too hung up on whether the loan amount will impact your chances of acceptance, focus on how affordable the monthly repayments will be for you personally and how your credit history could impact your chances of being accepted for a loan.

Always check your eligibility

While your eligibility won’t impact how much you can borrow, it will impact whether your application is accepted.

Every lender will have their own eligibility requirements, which is essentially a checklist of criteria applicants must meet before they’ll be considered for a loan. These requirements are in place to ensure only the most suitable candidates are considered for certain products, reducing the likelihood of a customer experiencing financial strain which may lead to them defaulting on their agreement.

Our guide on personal loan eligibility goes into more detail on the factors that affect personal loan eligibility.

Your credit risk could impact how much you can borrow

Having a good credit score and strong credit history could increase your chances of getting a larger loan amount at a more competitive rate.

Lenders like us use your credit report to assess how you’ve handled debt in the past. Have you taken out debt and repaid it on time? Is there any evidence of late or missed repayments?

A strong credit history demonstrates your ability to manage debt responsibly, while a poor credit report can impact your ability to borrow.

Having no credit history at all could also work against you. This is because if you haven’t had any experience of managing debt and you have no credit history, lenders won’t be able to assess how you’ll handle repayments in the future. It would certainly be ambitious to apply for a loan for tens of thousands of pounds if you’ve never repaid a credit card, loan, mortgage, bills or even a mobile phone contract before.

Find out more about your credit score and our advice on how to improve it here.

Monthly payments must be affordable

Your income and employment history may affect how much you will be able to borrow. Simply put, if there’s a risk you won’t be able to afford the debt, your application may be declined even if you have a very strong credit history. Lenders need to be confident that you can comfortably handle the amount of debt you’ve applied for.

To assess your affordability, lenders will look at your income, employment history and debt-to-income ratio.

Employment and income

Lenders like to see stability. An applicant who can demonstrate a steady income coming into their current account every month is more likely to be accepted for a loan, as this demonstrates they may be more capable of managing regular repayments.

Some lenders may also require you to earn a minimum amount to be eligible for a loan too. For example, here at Novuna Personal Finance, we require applicants to have an income of at least £10,000. Having a stable source of income improves a lender’s confidence that you’ll be able to afford a personal loan.

Your debt-to-income ratio

Your debt-to-income ratio, which is essentially how much of your monthly income is accounted for by debt repayments, helps lenders like us determine how much you can afford to borrow.

Lenders like to know you’ll be able to afford your loan repayments comfortably. So, by looking at your monthly income and credit commitments (including the new loan repayments), lenders can determine how much money you’ll have leftover for other essential expenditure. If it’s likely additional credit would cause financial strain, your application may not be accepted.

It’s recommended to keep your DTI below 40% (so no more than around 40% of your income is going towards paying off credit cards, loans, mortgages etc). If you have a high debt-to-income ratio, it’s recommended to wait until your level of debt is lower before applying for a personal loan. This could improve your chances of being approved.

Of course, the amount you apply for will have an impact on your debt-to-income ratio and ultimately the outcome of the lending decision. You may be able to afford a smaller loan amount, for example, or a larger loan repaid over a longer period (though do be aware that you’ll pay more interest overall this way).

Knowing how much to borrow

Personal loans are best suited for more significant purchases rather than for day-to-day expenses. With this in mind, it’s a good idea to do your research and know precisely how much you want to borrow before applying for a loan. Don't borrow more than you need, as you'll end up paying interest on the extra money.

While a smaller loan may typically come with smaller monthly repayments, this will depend on how long you borrow the money for. You may wish to spread the cost of your loan over a longer period to keep your monthly repayments down, though you will pay more interest over the life of the loan. The other alternative is to stick to a shorter term and make greater monthly payments to reduce the amount of interest you pay in total.

If you’re looking for more information, you can find out everything you need to know about personal loans here.

What can I do if I don’t qualify for the amount I need?

You have a few options if your loan application isn’t accepted:

• Check your credit report and make sure it’s free from any errors. Look over the information and see if you can identify any clear ways to improve it, such as keeping up with your repayments or registering on the electoral roll. Improving your credit score will help increase your chance of getting accepted for a personal loan or other forms of credit in the future, so this is a worthwhile next step.
• Work to pay off your existing debts. If you have a high debt-to-income ratio, you should consider paying off some of your other debts before borrowing any more money. If you’re struggling to manage several monthly repayments, a debt consolidation loan could be a suitable option for you.
• Lower monthly repayments might be more manageable. You may be able to extend the term of your loan to make the monthly repayments more affordable without needing to reapply. Do be aware that borrowing over a longer period will mean you’ll pay more interest in total, though.
• Apply for a lower loan amount. Comparison sites may allow you to see what amount you could be eligible for with no impact to your credit score. So, if you can’t get the amount you want, this could be a good way to find out how much you might be accepted for.

If your loan application is denied for any reason, it’s important not to keep reapplying elsewhere. Every time you submit a loan application a hard search will be recorded on your credit report. Several of these searches in quick succession could be a red flag to a lender, so try to refrain from applying to lots of different lenders if your original application was denied.

Using a personal loan calculator

You can use an online loan calculator to find out how much it could cost to borrow the money you need.

This could help you to figure out how much a bigger loan could cost you each month (and in total) compared to a smaller loan amount. You can also adjust the loan term to see how this could impact your repayments.

Do keep in mind that most loan calculators, including ours, use a Representative Example to give you an indication of repayment costs. This means that, while the majority of customers will be given the rate advertised, the rate you’re offered may vary due to personal and financial circumstances.

Types of personal loans available

The type of loan you choose could impact how much you’re able to borrow, too.

There are two main types of loan: secured and unsecured.

Unsecured loans don’t require you to put up any form of collateral. Instead, lenders will make a decision based on your personal circumstances, creditworthiness and affordability. If you’re likely to be a good customer who repays what they owe on time, and the loan amount is likely to be affordable for you, you’ll probably have a better chance of being accepted and offered the most competitive rates.

Secured loans are pledged against a valuable asset such as a house or car. This means that, if you fail to make your repayments, your lender can seize these assets to repay your debts.

You may be able to borrow more money with a secured loan, as the amount you can borrow is usually related to how much you earn, the value of collateral available and any debt current secured against it. However, the loan term is likely to be much longer when you borrow a large sum of money. This means you may end up paying a greater amount of interest in total.

Finding the right loan for you

Finding the most suitable personal loan for you will depend on a number of factors, including your eligibility, a lenders’ terms and interest rate. Almost all lenders will make it clear how much you can apply to borrow so, if you have a set amount in mind, make sure you choose a lender that offers the money you need.

You’ll be able to compare the cost of borrowing across different lenders by looking at their APRs. The Annual Percentage Rate indicates how much you’ll need to pay back in total when you take out a loan, including the interest rate and any additional fees included with your loan.

Always research lenders carefully, consulting a financial advisor if you need further support.

Are you ready to apply for a personal loan?

You could borrow between £1,000 and £35,000 at competitive rates from as low as 7.4% APR Representative (£7,500-£25,000)

Check your eligibility and apply now