You need cash now, so you've decided to take out a personal loan. There's only one question: how much will you get? There are multiple factors that are considered when calculating the amount of your payday loan. Here are the things that will need to be considered.
The Maximum Loan Amount in Your State
Many states have a maximum cap on how much can be loaned to an individual. In Idaho, this cap is set at $1,000. In New Mexico, it's set at 25 percent of your gross monthly income. In Texas, instead of there being a maximum loan cap, there is a cap on how long the loan can last and how much can be charged. These calculations can be complex. There is also a cap on the amount of interest that can be charged but no cap on fees.
Your Monthly Income Amount
Lenders aren't checking your credit. Instead, they are lending based on your earning potential. Although you may only need as much as $500 a month in income, you're not likely to get a loan of more than $500 because you wouldn't be able to pay it back within the month.
Apart from the state-regulated caps, every lender has their own method of calculating a sufficient incometo-loan ratio. All that's universal is that making more money will lead to a larger loan offer.
Some of Your Monthly Expenses
On applications for a payday loan, the borrower will often have to report their housing costs and potentially their automobile and transport costs as well. The lender is trying to calculate a rough expense amount, to figure out how much of your funds are discretionary and can be used to pay them back.
If you currently make $1,000 a month but pay $1,000 each month in housing and on your vehicle, then it will be difficult for the lender to see how you'll pay back the loan. On the other hand, if you make $1,000 a month but pay $500 a month on your fixed bills, then the lender may be more willing to loan a larger amount to you.
Your Payday Lending History
Over time, you can build relationships with a single payday lending company. If you continually get payday loans and pay them back on time, then you may see the amount that is being loaned slowly creeping up - much like a credit line.
The limitations on personal loan amounts are designed to reduce risk. If you have already reduced risk by showing that you are a good customer and that you intend to pay back your debts, then the company will be more willing to work with you.
The limitations on personal loan amounts are designed to reduce risk. If you have already reduced risk by showing that you are a good customer and that you intend to pay back your debts, then the company will be more willing to work with you.
The Payback Period
Some loans are as short as a few days, and other loans will last for months. If you have a longer payback period, you may be able to get a larger loan. This is because a longer payback period means smaller monthly payments, which lenders know are more likely to be paid than large, lump-sum payments.
You can negotiate with lenders regarding the payback period, payback amount, and rates of interest that you're paying. If you can show that you have a solid history with payday lending, then you may be able to lower your interest and monthly payments.
The Amount You Need
For the most part, it's best not to get a loan that's more than you need. The lender doesn't know how much you need, so they can't be relied upon to do this calculation for you. You should first determine the right amount, based on your debts, and shouldn't get more than that amount - even if you're approved for it.
Payday loans are more common in Texas than most of the rest of America and are one of the few ways that individuals can get cash fast for their bills. As Texas doesn't regulate the payday industry as strongly as some other states, there is some room for negotiations when it comes to working with a lender. Contact Central Finance to get started on a personal loan today.
