Lenders love topping up your loan. And we don't.

It's just a top up... what harm can it do?

Some lenders may jump for joy when their customers apply to top up their loans. In this short article we'll explain why they do, and why we don't.

When the Christmas silly season approaches it can be tempting to reach out to existing lenders to add to your loan amount- it feels easier, quicker, and in the short term can make some people feel a sense of relief.

If you've already read the article on compounding interest you'll know that a finance company's income is a combination of interest that they charge on their loans, and fees that they charge for things like processing an application, or sending you letters or statements.

When you apply to increase the total amount you've borrowed (sometimes called a top up) you might get a charged a fee, will pay more interest, and may take longer to pay off the loan.

This is a win for the finance company. But is it really a win for you?

Why we don't like top ups

At Money Sweetspot we're focussed on helping our customers out of debt and achieving their financial reset goal. Our customers set this goal at the start of their reset journey.

We don't usually accept applications to top up your loan but if something unexpected has popped up please do get in touch with us BEFORE you take on additional debt elsewhere (as we definitely won't be able to assist with that).

This is because it increases your overall debt and will cost you more money and take more time to repay in the long run.

Christmas can be a time where it's tempting to borrow to pay for Christmas. But, is this really the way you want to enter the new year... with a debt hangover?  I'm not sure your loved ones would want you to do that.

If you're juggling your finances there are heaps of useful articles in your customer portal (and they earn points that are redeemed off your loan so it's a win- win!). You can also find free extra help on your finances through Sorted and Money Talks.