Can i borrow more than i earn?

loubie_lou

Hi,

I haven't been to this site for a while, but it looks good now!

I'll get to the point!

I earn about 12.5k a year but i want to borrow the same amount to consolidate student debts! Is this possible? The reason i ask this is because i applied at egg and they declined me. My credit report looks ok, i was wondering if this was the reason?

Thanks
Louise

Rafter

Louise,

Most lenders will lend you up to your annual income unsecured. Problem here could be a number of things......

1. Egg can already see you have £12.5k debt and don't know you are planning to consolidate so are saying no because they don't think you should have any more.

2. Your income isn't that large. By the time you take of food, bills, travel costs etc there isn't much left to service debt. Often the best rates and offers are only available to customers with larger incomes.


You may find it difficult to find a single lender who will lend you this much. I therefore suggest the following:

Schedule out your debts and the interest rates you are paying. Prioritise paying off the highest rate debt first.

Try applying for a zero % credit card and see whether you can reduce your interest bill that way by transfering a balance.

Don't pay off debt from the Student Loan company (if you have any). The interest rate is very low and you don't have to start paying it until your income hits a certain threshold.

Talk to the bank where most of your debt currently sits and see if they will give you a preferential graduate loan of some kind. Just make sure there are no nasty redemption penalties. Hopefully as your income rises you will be able to pay off some of it early.

Good luck.

R.