If you want to know what you can borrow, ask yourself a few important questions first. We explain here which steps you have to take before you look for a loan and a suitable lender. We also tell you how you can estimate the total amount that you can possibly borrow.
What can you borrow money for?
You don't always have to justify what you want to do with borrowed money, especially when it concerns a relatively small amount. Nevertheless, it is important that you ask yourself in the first place why you want to borrow money. This is the first, and perhaps the most important question to ask yourself if you are considering taking out a loan. Everything starts with this question.
Do you need money to replace a broken washing machine or do you want to borrow money to escape your daily tasks during a well-deserved vacation ? Do you want to borrow money to have a leak on the roof of your house repaired or do you not yet have a house and are you looking for a suitable mortgage ?
It is important that you realize that borrowing money in the longer term always costs you money; after all, you pay interest. Is it really necessary to borrow money or is it better to save the necessary amount together? If you have clear exactly what you want to borrow money for, you can make a well-considered decision.
How much money can you borrow?
Once you've mapped out what you need money for, then you have an idea of how much you need. For a small advance on your salary to buy something nice or to replace a broken appliance, a few hundred US dollars or even less will suffice. Buying a house is probably the biggest expense you will ever make in your life.
With small amounts of loans, the maximum that you can borrow is often a fixed amount. Your income or the fact that you have other current loans are of little or no importance there. However, if you take out a larger loan for, for example, the purchase of a car or if you want to take out a mortgage, many things play a role in determining the maximum amount that you can borrow. Your lender will then want to know a thing or two about you and determine a maximum based on that. What you receive in fixed income on an annual basis is of course the most important factor.
Where can you borrow money?
Different lenders suit different amounts. For example, you could take out a small, fast loan online where you already have money in your account within one or a few days. For a larger loan amount, you usually go into a longer process in which the lender checks whether you will be able to bear the costs of the loan.
The biggest distinction can be made between the private loans where you borrow from family or acquaintances, the loans that you take out from your bank and the loans that you can take out from other specialized, commercial lenders. Always take the time to find out which lender best suits your specific needs and which one can offer you the best and cheapest loan. Doing a little research can save you a lot of money in the long run!