As a business owner looking to scale or a worker who needs to meet some urgent financial need, it is only logical that one of the places you would have considered getting the money from would include a bank. It is one thing for a bank to offer loans, and quite another to get the amount you need. Which begs the question: just how much money can you borrow from the bank?
Before you borrow from the bank
Before you get an answer to the question at hand, you need to understand certain things:
Understand that not all banks are equal
The amount you seek just may be dependent on the kind of bank you choose to go with. It would be a waste of time to visit a microfinance bank for a loan worth millions, while the same bank would be useful for a lower-digit loan.
If you want a mortgage loan, a mortgage bank might be better for you as opposed to a commercial bank.
Understand your credit
How much you borrow from the bank or if the bank accepts to grant your loan request in the first place will be dependent on your credit history. If you have a good history of paying back money borrowed promptly, the bank may be more eager to grant you bigger loans or a totally different loan than the ones you have usually collected in the past.
Understand the type of loan you need
Do you need a loan for small but urgent personal pressing need? Are you seeking a loan to finance a house purchase? Do you want to borrow money to get your dream car? Or perhaps it is for your business?
Understanding why exactly you need to borrow money from the bank will guide you into knowing just how much you should ask for in the first place.
Understand that you need to have an account with the bank first
It is impossible to obtain a loan from the bank without an account with them. Unless you have collected loans from other credible institutions or organizations in the past, no bank will ordinarily offer you a loan without an account. Even then, you will be required to open an account first and possibly maintain a certain deposit for a period of time before your loan request will be treated.
Now that you are aware of these points, let’s see just how much you can get from the bank
How much money can you borrow from the bank?
How much you can borrow will be determined by the bank at the end, but you can have a fairly good idea even before you go in to make your request. The money a bank will lend you will depend on the following factors, although it is not limited to them.
Your credit
The lower your credit score, the lower the amount the bank will be willing to give you.
Your debt-to-income ratio
Banks are always on the lookout for your ability to repay your loan. As such, no bank will give you an amount that is higher than your monthly income.
Your collateral
Depending on the amount you’re requesting and your monthly income, you may be required to drop collateral that can be sold to recoup the loan if you default. The value of your collateral can also affect how much you can get from the bank.
