When looking at applying for a personal loan, it can be difficult to calculate how much to borrow, especially if you’re planning to make multiple significant purchases. It’s always worth taking your time and coming to an informed decision before starting to compare personal loans online.
A few facts to think about when coming to a decision on how much you should borrow:
- The more you borrow, the more interest you will usually have to pay on top
- Small personal loans are usually unsecured, which is a less risky way to borrow
- Large personal loans are usually secured, which is a riskier way to borrow
Whether you would like to borrow a personal loan worth £10000, £20000 or £25000, take a look at our guide below to help you make up your mind.
How much can I borrow?
When getting a personal loan, the amount you’re able to borrow is very much dependent on how much you can afford to repay.
You might be able to find large personal loans that will cover the significant purchases you plan to make, but without the necessary funds to repay the loan, you will either be rejected or face financial difficulty.
Instead, it’s always best to approach a personal loan with an amount in mind, before starting your search. The other factor is deciding how long you will need to repay your loan, otherwise known as loan period. For example, a personal loan might look like the following:
- £10,000 over 5 years
- £15,000 over 7 years
- £25,000 over 10 years
Combined with your personal details and credit score, you will then find out how likely you are to be accepted, along with the lowest interest rates available to you, for the amount and period you have requested. You can find out more about personal loan eligibility here and personal loan interest rates here.
It’s always best to start this journey by using an eligibility checker such as MoneyMatcher, giving you an indication of what loan products are available without affecting your credit score.
Should I get a small personal loan?
- Small personal loans are usually between £1000 and £35000
- They could be easier to be accepted for compared to larger amounts
- They are usually unsecured personal loans, which means they are not secured to an asset you own. This means your personal assets are not at risk
Getting a small personal loan can be useful for covering a significant purchase that would otherwise require a higher rate of interest to pay off, if going down the route of a finance deal or otherwise. There are many different purposes for small personal loans, including a home improvement, booking a holiday, paying for a wedding or purchasing a new car.
When borrowing a smaller amount, you can usually opt for an unsecured loan, which means it isn’t secured against a high-value asset such as your home. This makes the loan product a lot less risky, but you will have to make sure your credit score is good or excellent to give yourself a better likelihood of being accepted.
If you’re considering a small personal loan, it’s always worth comparing the interest rate with other credit products to see whether you are getting a better deal. By using MoneyMatcher you can find the best personal loan rates for you and if they are smaller than what you have been offered elsewhere, it could be a preferable option for you.
Should I get a large personal loan?
- Large personal loans are usually between £35000 and £250000
- They could be more difficult to be accepted for compared to smaller amounts
- They are usually secured personal loans, which means your personal asset (usually your house) is at risk if you fail to make repayments
Getting a large personal loan can be useful for covering multiple significant purchases or large home improvement projects that could add value to your property. An example of a large personal loan is a mortgage, which is where you pay off the value of a property over the course of many years, rather than attempting to pay for it all at once.
When borrowing a large amount, you either have the option of an unsecured loan up to the value of £35000 (on our panel) or if you are borrowing more than that, you may have to opt for a secured loan instead. Secured loans come with more risk than unsecured loans as they are secured against a high-value asset such as your home. That means if you fail to make repayments on time and in full, the lender may repossess your home in lieu of payment.
If you’re considering a large personal loan, it’s always worth finding the best deal for you and making sure you can afford to make repayments for the lifetime of the loan. That means ensuring you have a steady source of income and ultimately are able to afford the extra expense every single month.
Given that secured loans come with added risk, it’s always worth comparing other credit products to see whether they might be a better fit. Start with MoneyMatcher to see what large personal loans are available for you.
You can also read about the advantages and disadvantages of personal loans here.
Start your personal loan soft search
Whether you choose to get a large or small personal loan, make sure it is the right product for you and always use an eligibility checker such as MoneyMatcher first. Since it is a soft search, it will not affect your credit score and give you FREE personalised results, so you can always change the loan amount and loan period to find the best available loan for you. Get started using the link below.