4 Factors That Affect Your Borrowing Power – What to Know

At one point or another in their life, the average Australian has most likely encountered a tight financial situation. Regardless of whether it’s over a medical bill, personal debt, or following one’s own dream, being in debt or having an emergency related to money matters can be nothing short of stressful. As a result of these circumstances, many have found themselves in a situation where they’re forced to take out a loan to satisfy their needs – a process which is a hurdle in itself.

Among all the factors that you’ll need to consider in the borrowing process, there’s one particular aspect that tends to be more important than most details: your borrowing power.

An overview of your borrowing power and what affects it

Your borrowing power is best defined as the total amount of money that you can receive when taking out a loan. This particular factor helps set the total amount that you can avail of in your principal amount and can easily make a difference in whether or not a loan can wholly satisfy your needs.

One important factor to note when going over this concept is that it can be affected by a greater number of details, all of which can be improved on your part. Here are four important factors that can affect your overall borrowing power:

1. Your stated income

Out of all the different factors that can affect your overall borrowing power, your income is especially important to consider because it’s what lenders look at when gauging your ability to make repayments.

If your current borrowing power isn’t as sizeable as you need it to be, know that you can increase your capacity with various means. For instance, showing any increases in your salary, attaching a document with proof of regular savings in your application, or applying for a loan with your partner can make a significant difference in the outcome!

2. Your current debts and living expenses

One important bit of information that any borrower should take into consideration is that one’s debts and living expenses bear as much weight in determining their buying power as income and savings. The main reason banks or lenders hold this factor in such high importance lies in the fact that outstanding financial commitments can affect your ability to repay punctually and adequately.

3. Your deposit amount

During the loan application process, chances are that you’ll need to shell out a specific amount of money in the form of a deposit.

What most people don’t understand about this particular factor is that it can greatly affect the overall amount that you can borrow (a bigger deposit makes for a greater borrowing power). Keep in mind that your overall deposit shows the lender of your ability to save money over a period, which is a factor that tells your ability to fulfil your financial obligations!

4. Your credit history

Another factor that can affect your borrowing power is the current credit history or record that you bear. In comparison with other factors on this list, this bears a greater amount of weight on the tabulation process for your borrowing capacity because a detailed history paints a clearer picture of your financial abilities!


When you are in need of financial assistance, your borrowing power is guaranteed to make a significant difference in the overall experience and convenience that you’ll have when going about the process. By taking note of all the important details mentioned above regarding your current capability, you’ll be able to get a clearer picture of your capacity and take the necessary steps to improve it!

Home loans, car loans, and equipment finance are just a few of the aspects that our team at  Finance Corp does best. Contact us now to see how we can help with your financing needs in Perth!