Applying for a personal loan can be tricky. Unlike a mortgage loan, personal loans are not backed by a house. Unlike a car loan, personal loans are not backed by an automobile.
If you are wondering about how to get a personal loan, know that you need to be prepared to present the type of loan package that the bank or financial company expects. Preparation is crucial, according to Artie Berne, founder of ArTex Funding in Austin, Texas.
"You need to prove all your income and expenses," Berne said. "These days, banks and alternative funding groups want to see information. Lots of information. They want to see a full, complete financial package."
How to Get the Maximum Personal Loan Amount
Four factors will determine the maximum personal loan amount you can get:
The purpose of the loan
Your income
Your expenses
Your credit score
In some cases, the purpose of the loan will have an especially large bearing on the size of your personal loan. For example, with a secured loan, the size of the loan will depend on the value of the collateral you post. With a home equity loan, the amount you can receive probably will be capped at 85 percent of your home's value.
Your income and expenses also will play a key role in the size of your personal loan. To get the maximum-sized personal loan, you will need a strong income and low expenses. Banks look closely at these figures, so make sure you lay them out clearly.
It will also help if you can boost your credit score before applying. Credit scores have a big impact not only on whether or not you are approved for a personal loan, but also on the interest rates lenders charge. So if you want a good APR, you need good credit.
Following are various types of loans, and the maximum amount you can get for each.
Installment Loan
An installment loan is a loan that has a set number of scheduled payments over time. These loans can last for just a few months or for many months, and payments are evenly spread out, or amortized, over the overall term of the loan.
These kinds of loans are ideal for those needing a mortgage or auto loan, or for people trying to improve their credit history by showing they can make payments responsibly.
Lending Tree offers up to $35,000, and SoFi offers between $5,000 and $100,000.
Small Business Loan
Most often, a small business loan is used to help entrepreneurs get a proper start. The loans are typically available after developing a business plan, obtaining licenses and doing other preliminary business tasks. The Small Business Administration backs many small business loans, and such loans are available at many banks.
SBA loans from Bank of America start at $25,000. Some types of SBA loans at Bank of America have no upper limit. SBA loans also are available at Wells Fargo, and can be $5 million or more, depending on the nature of the loan.
Related: Business Loan or Business Credit Card: Which Is Better?
Short-Term Personal Loan
A short-term personal loan is one that is paid back in three to five years. These loans are usually for a small amount of money and appeal to borrowers looking for no prepayment penalties and an easy application process. Short-term personal loans can be used for almost any purpose and are backed by the creditworthiness of the borrower in question.
Discover offers personal loans up to $35,000. Lending Club offers personal loans from $1,000 to $40,000.
Secured Loan
As the name implies, a secured loan is a loan secured by a piece of property you own -- stocks, bonds, a house, a car or even jewelry. You need collateral for these loans. Typically in these kinds of loans, the lender holds the title or deed to the collateral in question until you pay off the loan in full.
Borrowing limits on these types of loans are largely dependent on the value of the collateral being posted. These kinds of loans can be used for a variety of purposes, since they are backed by your existing collateral.
Related: What Is the Difference Between a Secured Loan vs. an Unsecured Personal Loan?
Unsecured Loan
An unsecured loan is a loan not backed by other property you own. Most of these loans have fixed terms and interest rates. As a result, the loan is amortized, meaning it has the same payment each month over time.
These kinds of loans can be used for:
Consolidating debt on credit cards or student loans
Making home improvements
Paying for a vacation
Avant offers unsecured personal loans from $1,000 to $35,000. Wells Fargo offers unsecured personal loans from $3,000 to $100,000.
Home Equity Personal Loan
A home equity personal loan is a loan for a fixed amount of money. Your home secures the loan. With this type of loan, you repay in equal monthly payments over a fixed term. If you do not repay, the lender can foreclose on your home. The amount you can borrow is usually limited to 85 percent of the equity in your home.
This type of loan is best used for:
Home improvements that add value to your home
Cash for a large purchase
Funds for college
Consolidating debt
The amount you can borrow varies. For example, Discover lets people borrow between $25,000 and $150,000.
Related: 5 Best Loans for People With Poor Credit
Home Equity Line of Credit
A home equity line of credit, or HELOC, is another option for personal loans. A HELOC is a revolving line of credit similar to a credit card. At any time, you are able to borrow as much as needed, subject to the maximum loan amount you are granted.
To tap the funds, you can simply write a check or use a credit card connected to the account. Your total loan amount cannot exceed your credit limit, but payments are only made on the amount you actually borrow from the bank. These types of loans are commonly used for home renovations.
Chase offers HELOCs between $50,000 and $500,000, whereas Bank of America offers $25,000 to $1 million.
What is the maximum personal loan amount I can get?
Here is the maximum you can get for each loan type, as well as what you need to offer for collateral and which factors are considered when you apply.
Type of Personal Loan
Available Loan Amount
Situation Loan Is Best Used For
Collateral Needed
Factors Considered
Installment Loan
Lending Tree: Up to $35,000
SoFi: $5,000 to $100,000
Needing a mortgage or auto loan
Improve credit history
Yes
Steady source of income
Not currently in debt or bankrupt
Small Business Loan
Bank of America: Starts at $25,000; might not have upper limit
Wells Fargo: Can be $5 million or more
Starting a new business
Running an existing business
Yes
Sound business purpose
Good character
Ability to pay back loan
Short-Term Personal Loan
Discover: Up to $35,000
Lending Club: $1,000 to $40,000
Needing funds quickly to overcome a financial setback
No
Credit history
Secured Loan
Varies depending on the nature of the collateral posted
Paying mortgage, auto loan or boat loan
Yes
Value of collateral
Unsecured Loan
Avant: $1,000 to $35,000
Wells Fargo: $3,000 to $100,000
Paying off credit cards, personal loans or student loans
For home improvement project
No
Character
Capacity
Capital
Collateral
Conditions
Home Equity Personal Loan
Discover: $25,000 to $150,000
Paying for home improvements
Needing cash for a large purchase
Paying for college
Consolidatign debt
Yes (home)
Income credit history
Market value of home
Home Equity Line of Credit
Chase: $50,000 to $500,000
Paying for home renovation
Planning for a major expense
Yes (home)
Income credit history
Market value of home
This article originally appeared on GOBankingRates.com: How to Get the Maximum Personal Loan Amount