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How Much Can You Get for Your First Loan?

When you want to take your first loan, you surely must have many questions on your mind. For example, you may wonder, ”how much can you get for your first loan?” In that case, you definitely have to be prepared for some research. But, don’t worry, having your first loan approved doesn’t have to be stressful when you have all the information.

New borrowers can obtain personal loans worth anywhere between $1,000 to $100,000, or $7,000 on average. However, the approved amount will depend on the borrower’s credit score, income, existing debt, employment history, and loan type.

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Getting your first loan can cause some mixed emotions, both thrilling and overwhelming. Find out everything about your first loan and how to get it in the fastest possible way.

How Much Can You Get for Your First Loan?

If you’re applying for a first loan, you need to know that the average amount lenders usually give new borrowers is $7,000. No matter your reasons for taking out a loan, be aware that the first loan can go from $1,000 to $10,000, depending on many factors.

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What Factors Determine the Size of Your Loan?

From figuring out whether a loan company can sell your loan, how people actually get their mortgage deed, and whether a mortgage tax is tax deductible, dealing with finances for the first time can be a bit overwhelming. But, apart from that, you also have to consider the factors that will impact the amount of money you can borrow with the personal loan, including:

  • Credit score,
  • Income, and existing debt,
  • Loan type,
  • Employment history.

Credit Score and Report

The credit score is a measurement of how well you handle debt repayment. Your credit report is updated each time you pay a credit card bill in full, make a loan payment late, or borrow money. Your credit score is typically determined by rating the information on your credit report, commonly known as your “credit history,” on a FICO scale of 300 to 850.

A strong credit history and score demonstrate to creditors that you make on-time payments on your credit commitments. Your chances of getting a loan at the best rates increase with improving credit. Over the course of the loan, choosing the optimal conditions can save you thousands.

Here’s what, for instance, a five-year loan for $25,000 with an interest rate differential of 2 or 4 percentage points can imply for your wallet:

Interest rateTotal interest paidMonthly payment

In this instance, the difference in interest cost over five years between a 6% to 10% interest rate is $2,872. If a bigger, longer-term loan is something you’re thinking about, this amount rises significantly.

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Income and Monthly Payments

Your monthly income is one of the most important criteria in evaluating how you are able to borrow. Lenders are interested in how your budget will change once you start making another monthly payment. A lender may assess this by looking at the debt-to-income ratio (DTI).

Lenders add up the fixed monthly payments to determine DTI. Mortgages (even the reverse mortgage), credit cards, renting a place, as well as auto loans, and other personal loans fall under this category. They add everything up and then divide it by your gross monthly salary (the amount you earn before taxes and other deductions).

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Type of Personal Loan

Personal loans come in two varieties – secured and unsecured. Depending on what type you require is one of the factors that will determine the size of your loan.

  • Personal loans that are not secured by collateral can be issued. Based on the financial history you have, the lender determines whether you are eligible. Some lenders also provide secured loans if you’re not qualified for an unsecured loan or require a lower interest rate.
  • Personal loans with security, like savings accounts or certificates of deposit, are available. Your lender normally has the authority to seize your asset as compensation for the loan if you are unable to make your installments.

Employment History

Potential lenders will probably ask for your current employer’s contact information and maybe the past employer’s information. Both parties may be contacted as references or to verify income and employment dates.

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How to Speed Up the Approval Process

Once you figure out whether you can lower mortgage payments and even whether the mortgage can expire, pass on checking how to speed up the whole application process for the first loan.

If you’re seeking a personal loan, you probably want access to the funds as quickly as possible. By following these suggestions, you can prevent delays while applying for your personal loan.

  • Before applying, check your credit report – Before searching for personal loans, be aware of your credit situation. It may be simpler to qualify for a personal loan with a lower interest rate if you have good credit. Furthermore, when you’re asking for a loan, recognizing and fixing faults right away is an easy method to prevent problems in the future.
  • Clear your debt – Paying off some debt will improve your credit score and reduce your DTI ratio, which can increase your chances of getting approved for a loan if you have debt but don’t need the money right away.
  • Speak to the financial institution you now use – A customer with whom a bank or credit union has a positive, long-standing connection may be more likely to submit a personal loan application.
  • Obtain pre-approval – You can go through a prequalification process with some lenders without a strict credit check. In order to decide whether working with the lender is profitable, you may also get an indication of what your loan rates and terms might be before you apply.
  • Think about online lenders – Many online lenders provide same-day loan decisions, and if you are accepted, money may be put into your bank account within a few days following your application.
  • Pick up your loan money in person – Whether your lender has a physical location, find out if you may pick up funds there to receive them more quickly.

Have the Best Experience When Applying for Your First Loan

Having your first loan approved doesn’t have to be stressful at all. In fact, once you have all the needed information, you’ll probably have the effortless experience which you can pass on to your family and friends and become a real pro when it comes to finances.