What is the maximum amount I can borrow on a personal loan?

Unlike a home loan, you don’t need to apply and wait to see what loan amount the lender approves you for. Personal loans allow you to request the exact amount of funds you need.

When you apply for a personal loan, you’ll nominate the amount of money you want, which is generally capped between $5,000 and $60,000. This is where most Australian personal loan lenders set their limits, whether you apply with a small lender or a big four bank. However, some lenders may offer higher borrowing limits, particularly for secured loans backed by an asset like a car, or even art or jewelley.

That said, there's no guarantee that you'll be approved for the amount you request. Personal loan lenders must adhere to strict regulations that help to prevent everyday Aussies from taking on too much debt and being unable to repay it.

These regulations influence the eligibility criteria set by the lender, which may include:

• Credit score: Having a good to excellent credit history
• Residency and ID requirement: Being an Australian citizen or permanent resident, and having acceptable identification (Australian passport or driver’s licence)
• Income level: Earning a minimum income set by the lender
• Employment status: Being employed and not in probation
• Type of loan: Potentially securing the loan with an asset to reduce the risk of default

Within each category, there are different outcomes that may present your personal loan application as less risky and therefore boost your chances of approval for a large loan amount.

For example, being employed full-time for 1-2 years may showcase a greater level of financial stability in your application than if you were casually employed for a few months. The former indicates you may be receiving a higher, regular income and may be better prepared to repay the loan.

It’s not just your personal financial situation and application that may impact whether a personal loan lender will let you borrow the maximum amount on a personal loan. It may also come down to the loan purpose and loan type.

Secured loans, which require an asset like a car or property as collateral, may offer higher borrowing limits since they carry lower risk for lenders. In contrast, unsecured loans typically have stricter limits, as lenders rely solely on the borrower’s financial history to determine repayment ability.

The purpose of the loan may also impact the borrowing limit. Car loans, for example, may allow larger amounts since the vehicle itself can act as security.

Repayment capacity is another critical factor. Lenders assess income stability, debt-to-income ratio, and employment status to determine whether an applicant can comfortably meet repayments. A strong financial position with steady income and minimal existing debt may improve borrowing capacity.

If you’re interested in discovering how much you may be able to borrow, consider using our RateCity Personal Loan Borrowing Power Calculator.

You’ll just need to enter in some information, such as the amount you want to repay, the repayment frequency and your credit score, and the calculator may help to determine your estimated borrowing power.

Be realistic with your budget and take stock of what you can afford to repay each week, month, or fortnight. The Borrowing Power Calculator may then help to determine what the maximum personal loan amount is that you can responsibly afford.

Whatever your personal loan purpose is, keep in mind that the greater loan amount you request, the higher your ongoing repayments may be. Even if you nab a low-rate personal loan, the interest charged on a larger loan amount may add up compared to borrowing a smaller amount with a higher rate. Be sure to calculate the cost of interest repayments on your large personal loan before applying to ensure you can afford repayments.