How long after pay rise ?

Raffers

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.

Sncjw

Can you over pay on your loan. Then it would be clear within a a year going by your pay rise

Barny1979

£5k loan but over £10k extra, why reapply for a loan, just clear it in 6 months?!

Dobbibill

I agree with the previous posters overpaying is the way forward and clear it all ASAP.

Craig1981

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

I'd use the extra money to pay it off quicker.

Shakin_Steve

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?

Raffers

Thanks all. Seems unanimous that I'm better off keeping and tackling the current loan now that I'm financially better able to.

forgotmyname

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.

PixelPound

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

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