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How long after pay rise ?

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Raffers
Raffers Posts: 131 Forumite
Part of the Furniture Combo Breaker
edited 21 October 2018 at 11:56AM in Loans
So, I applied for and accepted an unsecured loan a few months back (£5K @ 11.7%APR over 3 years). This was via Hitachi and I had applied to them because their advertised rate was appealing (something like 3-4%). Since that date, I've been fortunate enough to have gained a workplace promotion this last month. My salary has increased by almost £10K pa. :)

My question is how long should I leave things before trying to apply for better lines of credit due to my improved circumstances? (i.e. loan with possible lower APR or money transfer CC) . I realise this is not going to be a straightforward 'X amount of time' answer. I'm just interested in how long positive changes take to filter across the various companies.

For what it's worth, my credit file(s) are generally in good shape. My previous income level seems to be the only major factor I'm aware of as to why I was being offered the above rates.
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Comments

  • Sncjw
    Sncjw Posts: 3,562 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Can you over pay on your loan. Then it would be clear within a a year going by your pay rise
    Mortgage free wannabe 

    Actual mortgage stating amount £75,150

    Overpayment paused to pay off cc 

    Starting balance £66,565.45

    Current balance £58,108

    Cc around 8k. 

  • Barny1979
    Barny1979 Posts: 7,921 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    £5k loan but over £10k extra, why reapply for a loan, just clear it in 6 months?!
  • Dobbibill
    Dobbibill Posts: 4,191 Ambassador
    Part of the Furniture 1,000 Posts Mortgage-free Glee! Name Dropper
    I agree with the previous posters overpaying is the way forward and clear it all ASAP.
    I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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  • Craig1981
    Craig1981 Posts: 769 Forumite
    Third Anniversary
    overpayment will save interest as well, have a google for loan overpayment calculator.... see how much you can save by overpaying

    but, as all have said, clear this full, dont take out other applications in the hope of getting better interest rates
  • Fireflyaway
    Fireflyaway Posts: 2,766 Forumite
    Fifth Anniversary 1,000 Posts
    I'd use the extra money to pay it off quicker.
  • Shakin_Steve
    Shakin_Steve Posts: 2,813 Forumite
    Ninth Anniversary 1,000 Posts Photogenic Name Dropper
    Raffers wrote: »
    So, I applied for and accepted an unsecured loan a few months back (£5K @ 11.7%APR over 3 years). This was via Hitachi and I had applied to them because their advertised rate was appealing (something like 3-4%). Since that date, I've been fortunate enough to have gained a workplace promotion this last month. My salary has increased by almost £10K pa. :)

    My question is how long should I leave things before trying to apply for better lines of credit due to my improved circumstances? (i.e. loan with possible lower APR or money transfer CC) . I realise this is not going to be a straightforward 'X amount of time' answer. I'm just interested in how long positive changes take to filter across the various companies.

    For what it's worth, my credit file(s) are generally in good shape. My previous income level seems to be the only major factor I'm aware of as to why I was being offered the above rates.
    The only way lenders will know that your income has increased is if you tell them, say, on a loan application. Lenders will see your improved circumstances more easily if you reduce your debt and, as has been said, you will also pay less interest.

    If you've had a £10K pay rise, why do you need to take on debt?
    I came into this world with nothing and I've got most of it left.
  • Raffers
    Raffers Posts: 131 Forumite
    Part of the Furniture Combo Breaker
    Thanks all. Seems unanimous that I'm better off keeping and tackling the current loan now that I'm financially better able to.
  • forgotmyname
    forgotmyname Posts: 32,922 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Just because you earn more doesnt make you a better risk. Lots of people earn a lot of money yet manage to spend more than they earn.

    If your £10k better off why do you need to borrow money? If you save they pay you.
    Censorship Reigns Supreme in Troll City...

  • PixelPound
    PixelPound Posts: 3,058 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Barny1979 wrote: »
    £5k loan but over £10k extra, why reapply for a loan, just clear it in 6 months?!
    ^^^^^^^^^^^^^ This

    By the time you wait for being able to get a better rate, the loan would be paid off
  • Herzlos
    Herzlos Posts: 15,878 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Take the difference in your monthly income and put it straight into overpaying the loan, and then into savings.


    Then next time if you need to borrow you'll have a better credit score, higher salary and bank statements to prove it :)
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