Managing your outstanding debts might be complicated when you have multiple creditors and varying due dates for payments. Because of this, you may need help to keep up with your payments and spiral deeper into debt due to late payment costs.
So, you’ve reached the point where you’re completely drowning in debt. What now? A debt consolidation loan can help you bring all your obligations under one roof, making it much simpler to manage.
How do debt consolidation loans function, and can you qualify for one? Here, we will cover debt consolidation in Singapore in further detail. Keep reading to find out!
What is a Debt Consolidation Plan?
Debt consolidation loans in Singapore are excellent for people struggling to keep up with their mounting debt or afford their high-interest-rate mortgage payments. Debt consolidation is a financial strategy that involves bringing together all of your credit facilities (such as joint accounts, credit cards, and home improvement loans) under one management program at one financial institution. Its primary goal is to cut your interest rates, reduce your monthly payment, and facilitate debt repayment.
This debt relief solution might help customers avoid the financial knot that comes with paying off many invoices from different organizations by different due dates. Consolidating your financial obligations into a single strategy could help you save both time and money.
How Does it Work?
To those who have trouble keeping up with the payments on their many obligations or who have difficulty making even the minimum payment when it’s due, a debt consolidation loan can be a lifesaver. You can get a lower interest rate on this loan than on your credit cards or other unsecured loans, making it easier to pay off your bills. If you’ve merged your debts, you’ll only have one payment due date to keep track of.
For the duration of a debt consolidation loan, you will be required to make instalments monthly. In addition to a lower interest rate, the time you can borrow money will likely be extended. Private debt consolidation loan lenders are an excellent option for this kind of loan instead of borrowing from banks.
What are the Perks of Debt Consolidation?
1. Simplify Your Expenditures and Income
Inconvenient as it may be, keeping track of your monthly payments is essential. Debt consolidation is widespread since it reduces the monthly bills you have to pay. When you consolidate your debt, you’ll have only one monthly payment and one due date to remember.
In addition, the amount of each payment is established in advance, so you’ll always know how much to put away. You’ll be able to make more progress toward your debt-free goal if you have a clearer picture of when your monetary obligations will be fully satisfied. Debt consolidation facilitates better financial management and lessens the likelihood of missed or late payments.
2. Loan Terms are Flexible and Can be Chosen by the Borrower
Generally speaking, credit cards in Singapore require a minimum payment to be made each month. Late payment fines will be assessed if the minimum due date is not met. On the other hand, if you select a debt consolidation plan, you get to decide how long your loan is, which can make your repayments more manageable.
The loan terms for debt consolidation programs might be as long as ten years. Your monthly payment will be less expensive if you extend the length of your loan. It may be easier to make your monthly payments if they are reduced.
It’s important to remember that a longer loan term will result in higher total interest payments. Paying more than the minimum each month is advisable to avoid accruing any more interest.
3. Increase the Rate of Debt Repayment
Consolidating your loans may speed up your ability to repay them. Interest costs less if you pay off your loans quickly, which is particularly helpful for charge card debt. In contrast to a debt consolidation plan, credit card debt repayment does not have a set timetable.
Therefore, if you can commit to a predetermined amount each month, a debt consolidation plan can help you pay off your credit card debt more quickly and in full.
You’ll be able to pay off your debts quicker with this strategy. That frees up cash flow so you can use it toward a down payment on a house or retirement savings.
Qualifying Criteria for a Debt Consolidation Loan
In Singapore, a debt consolidation plan is only available to certain people. You may qualify for a debt consolidation loan if you meet these requirements.
- Must be a Singaporean citizen or permanent residence
- Obtain an annual income of $30,000–$120,000 while maintaining a net personal asset value of less than $2,000,000
- Hold a total amount of unsecured debt equal to or greater than 12 times your monthly income
You will only be able to consolidate your debts if you match the above requirements. Remember that you can only participate in one debt consolidation program at a time.
A debt consolidation loan can be refinanced if you find a better deal, such as a cheaper interest rate or cash-back rewards, from another bank or licensed money lender. You may have to pay a fee if you decide to cancel your debt consolidation plan before it has run its course.
Before applying for a new debt consolidation loan, you should speak with your current loan servicer. After getting a debt consolidation loan, you can only get another one if your total debt is at most eight times your monthly salary. This is meant to remind you constantly of your obligation to repay your loan.
Choose a lender for your debt consolidation loan with caution. Many people have lost money to scammers, both online and offline, but the most common types of scammers are unlicensed moneylenders and debt settlement companies. Despite the low-interest rates they advertise, these lenders generally charge exorbitant upfront fees before disappearing with your money.
Make sure you’re dealing with a legitimate Singapore moneylender like Avis Money Lender. We will provide your debt consolidation loan and ensure you get the best terms for it. Contact us today for more information!
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