Throughout life, many projects require us to apply for a personal loan (consumer credit) to help finance them. One of the first questions that arises is “How much can I borrow for a personal loan?” Here are some insights and tools to help you answer it.
Simulate your personal loan online
Whether a consumer wants to borrow to finance their wedding, renovations in their apartment, computer equipment, or medical expenses, the maximum amount they can borrow will depend on several factors.
Range of Personal Loans
Note that personal loan amounts can range from a few thousand euros to several tens of thousands. Generally, the maximum amount for consumer credit is €100,000.
Because this type of request does not require justification for its use, the acceptance relies mainly on the borrower’s profile. The credit organization will consider the total monthly income of the borrower (salary, rental income, annuities, etc.), to calculate their borrowing and repayment capacity.
Understand Your Financial Situation
The financial situation of the person applying for the loan also depends on existing credits (mortgage loans, car loans, etc.). This information allows the credit organization to calculate the consumer’s debt ratio.
Note that if you wish to take out a personal loan, your debt ratio should not exceed 33% of your income.
To answer the question “How much can I borrow for a personal loan?” and know in advance what the financial institution will offer you, you can calculate your borrowing capacity yourself.
To do this, you simply use one of the many loan simulators available online. The loan simulation will give you a fairly accurate idea of the amount you can claim based on your situation.
In general, keep in mind that your borrowing capacity will mainly depend on your net monthly income, your debt ratio, and a credit rate grid established by financial institutions.
Know Your Debt Ratio
To answer the question “How much can I borrow for a personal loan?”, you must know your debt ratio.
Here is how to do it: The question is to know the part of your income that will be used to repay your consumer credit.
The calculation is as follows: debt ratio = (loan installment) × 100 ÷ (net income).
Note that the loan installment must encompass all repayment installments of loans you have already taken out, as well as the installments of proposed loans.
For income, you need to consider your net salaries (including bonuses if any), potential non-salaried income, and various pensions (including child support).
