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Do you know what additional borrowing is? With all of the jargon surrounding borrowing, it’s easy to get confused. But at Bamboo, confused is the last thing we want you to be – we want everything to be simple and easy to understand. That’s why we’d like to tackle a few common questions, misconceptions and misunderstandings that people have about borrowing and lending terms. This month, we look at additional borrowing.
What is additional borrowing?
Put simply, additional borrowing is literally borrowing additional money on top of the amount you’ve already borrowed. For instance, if you have a £3,000 unsecured loan, you might be eligible to increase the amount you’ve borrowed to £5,000, which means that you will have additionally borrowed an extra £2,000.
In principle, it’s similar to the idea of getting a credit card limit increase by requesting a higher limit from a credit card provider. When you request a credit limit increase, the credit card provider may ask for some information to process your request. For example, they may ask for your monthly income, how much you’d like to have your limit increased, and the reason for the increase. Of course, if you exceed your existing limit on your card or miss any payments, the card provider is unlikely to agree.
Lenders, like credit card providers, usually decide whether or not you’re a suitable customer by looking at your credit reference file, as well as making other checks. If you want your lender to increase the amount you can borrow, you need to be as creditworthy as possible. They will take into account how well you’ve managed your existing credit commitments.
Why do people use additional borrowing?
Sometimes, people like to consolidate all their debts into one debt – for example, credit card debt. In these circumstances, they increase the amount they’re borrowing and use the additional borrowing to pay off their existing debts.
Others, for example, will use the additional borrowing in unforeseen emergencies, such as the need for sudden car repairs.
The main thing is that people are able to borrow the money they need without the long application process – they’re already known by the lender, so it’s simple a matter of approving the extended amount and double checking that it is a responsible amount to lend (and that are able to repay it).
How do I qualify for additional borrowing?
As with all borrowing, additional borrowing is subject to checks. Lenders will check your repayment history and your personal situation to check that you can afford repayments. Lenders also check whether you’ve missed any payments on your current loan – having a missed payment makes being approved for additional borrowing very unlikely.
Is there anything else I should know about additional borrowing?
As with all loans and borrowing, you should only apply for it if you’re sure that you can afford it – the APR, rates and terms and conditions might all be different on your additional borrowing.
To find out if you can borrow some more money from Bamboo and apply for a Bamboo top-up loan please get in touch with the Bamboo Loyalty Team at 0330 045 0491 between 8am and 8pm Monday to Friday and between 9am and 2pm on Saturdays. Once our Loyalty Team confirms that you are eligible to apply for a top-up loan they will take you through the application for a Bamboo top-up loan (If you are an existing customer with a good payment record to borrow more money).
If you qualify for a Bamboo top-up loan, the existing loan will be closed and a new loan will be opened for the additional cash and the amount needed to close the old loan. This means there is just one repayment every month. If the settlement balance of your current loan is £2,000 and you want to borrow an additional £1,000 then your new loan would be £3,000. The minimum additional amount you can borrow is £500.
- Author The Bamboo Team
- Posted 1 November 2017