How Much Can I Borrow With a Personal Loan?

Finding Your Loans Value Sweet Spot When Applying for a Personal Loan

When it comes to borrowing money, how much you want to take out in the form of a personal loan, how much you should apply for and how much you can actually borrow are often quite different amounts. 

You may have a sum of money in mind when applying for instalment loans, for example, but be disappointed when you realise you don’t qualify for the amount you’re hoping to borrow. Alternatively, you may wish to borrow £5,000 to cover the cost of a particular project, only to realise later that you can’t afford the repayments required. With this guide, we hope to help you get the balance right between what you hope to borrow and what you can borrow.

Calculating how much you actually need to borrow on a personal loan 

When borrowing money, the less debt you take on, the better. The larger your loan the higher the interest repayments and the longer it will take you to clear the debt. Therefore minimising the value of the loan will help you keep your borrowing under control. It will also protect your credit rating which could be negatively affected by any missed repayments.

There are a number of things you need to consider carefully when deciding how much to apply for when taking out a loan. Ask yourself:

  •       What’s the minimum I need to borrow to fulfil my needs?
  •       How much can I afford to repay each month?
  •       Do I have a strong credit score?
  •       Have I struggled with repaying debt in the past and if so, why?
  •       Do I have other debt I need to service?
  •       Do I have a steady income?
  •       Do I have a secure income?
  •       What would happen if I lost my income? Would I still be able to meet my repayments?

Fundamentally though, there are some obvious places to start when calculating the optimum amount to borrow on a personal loan. Getting this right will mean gaining access to the money you need to meet your requirements, without taking on a financial responsibility that you can’t afford. 

What is the minimum amount of credit you need to borrow?

Think carefully about the amount of money you need to borrow before approaching lenders. It’s a good idea to consider other forms of borrowing, through friends and family, for example, which come without interest and charges. This could help to bridge the gap between what you want to borrow and what you need to borrow. 

Anything you can do to minimise borrowing is usually worth doing. For example, if you are using a loan to cover the costs of a renovation project, if you can pay for part of the project with your regular income, that reduces the amount you need to borrow. If you can wait until your next payday to get your washing machine fixed, and just borrow a small amount to cover costs your wages don’t quite stretch to, this could save you money by reducing interest payments.

How much money can you afford to repay on a loan each month?

Next, think about how much you can afford to repay each month. The best way to do this is to look at your monthly spending and figure out where you can cut back or how much you have ‘spare’ to cover repayments. If you struggle to make ends meet each month, how are you going to find the money for repayments without getting yourself in even more financial trouble?

Struggling with the cost of living? Help is available without borrowing

Borrowing to cover regular weekly or monthly expenses is never a good idea, so if this is you, check Citizens Advice which can advise you on any benefits you might be entitled to, but aren’t yet receiving. There is also advice available through the Trussell Trust on local food bank project that could help you reduce your financial burden by providing you with some basic food and groceries. The above sources of information can also be worth considering if you have a poor credit rating and cannot get a loan to cover essential costs.

For those who can afford to take out a loan, and are doing so for sound reasons, it’s time to take a careful look at your outgoings and financial responsibilities to help you work out what you can afford to repay.

Before you apply for loans or get credit, consider these costs

Here’s a list of some of the regular costs you need to take into account when deciding how much you can afford to put towards debt repayment:

  • Other debts you need to repay
  • Interest charges on those debts/credit cards/overdrafts
  • Vehicle costs
  • Utility bills
  • Council tax
  • Mortgage repayments
  • Travel costs
  • Food and grocery costs
  • School costs
  • Insurance
  • Subscriptions
  • Media and internet costs
  • Phone costs

If you are thinking about taking out a short-term loan to cover an emergency cost over a period of a few months, think about where you can make savings in order to ensure you meet your repayments. You may need to reduce your food bills, for example, or make savings on non-essentials such as clothes, media and phone costs for a short period.

What level of loan value does your lender offer?

Once you have calculated how much you need to borrow and how much you can afford to repay each month, it’s time to find the right lender. Short-term lenders tend to offer smaller loan amounts, usually up to around £1,000 or so. If you are keen to take on a longer-term loan, lenders may offer up to around £25,000 under the right circumstances. 

Choose a lender that offers the type of loan that works for your needs and compare interest rates, charges and total amount repayable figures carefully.

How much are you likely to be offered through a personal loan?

Taking out a loan of the right value for your needs isn’t just about how much you apply for. It’s also about how much the lender is willing to offer you. This comes down to a range of factors, such as:

  • Your employment status
  • Your credit rating
  • Your credit history
  • Your homeowner status
  • Your income
  • Your age and nationality

If you have a strong credit rating and are employed with a steady income, you are very likely to be offered the amount you apply for. However, if you have had problems with making repayments in the past, or if you have not taken out credit before, your credit rating may be low. This might mean lenders are less willing to offer you larger sums of money as you are seen as a higher-risk prospect. You may be able to get around this by applying for a guarantor loan, or even a secured loan, if you are a homeowner – although this comes with additional risks. 

Alternatively, you could try to improve your credit rating by taking out a small loan and making repayments in full and on time. This could improve your credit rating, making it easier to take out a larger loan on better terms later on.

Looking for a direct lender loan on a realistic payback schedule?

Warning: Late repayments can cause you serious money problems. For help, go to

Representative Example: Borrow £400 for 4 months, four monthly repayments of £197.48. Total repayment £597.48, interest rate p.a. (fixed) 255.5%. Representative APR 939.5%. Compare Moneyboat loans.

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Warning: Late repayments can cause you serious money problems. For help, go to