What is a debt consolidation loan?
Most often than not, people who have many different debts to pay off simultaneously — such as credit card debts and personal loans from different financial institutions and private licensed lenders — struggle with sky high interest rates and multiple due dates peppered across the month. Needless to say, these two factors combine to create a lot of extra strain and stress for anyone who’s committed to keeping track of their debt obligations and paying down their debts.
This is where a debt consolidation loan in Singapore shines; it lets you centralize your debts into one single debt so you only have to focus one one loan repayment instead of many different ones. This debt refinancing option is fantastic for debtors who want to stay on top of their finances while minimizing the chances of them missing out on loan repayments and reducing their interest charges altogether.
How does it work?
A debt consolidation loan is a godsend for those who have multiple debts to pay off at the same time as well as those who constantly struggle with the punctual repayment of their debts. This type of loan lets you consolidate your debts, often at a more manageable interest rate than if you were to deal with your existing debts as is. A consolidated debt also translates to one single payment due date — easy to remember and keep track of!
With debt consolidation loans, you will have to make fixed monthly repayments over the period of your loan tenure. You’ll usually enjoy a much lower interest rate (yay for your pockets) as well as a longer loan tenure. Besides banks, you can also turn to private debt consolidation lenders for assistance.
What are the different types of loans to consolidate debt?
If your debts happen to be credit card debts, you can consider a balance transfer if you qualify for one. A balance transfer is an unsecured, short-term facility that lets you transfer your outstanding credit card balances to a low or 0% interest account or credit line. Customers usually have 6-12 months to pay off their credit card balances at a low or 0% interest rate. A one-time processing fee to be paid upfront is applied on the approved transfer amount.
You can also utilize a personal loan for the purpose of paying off your other loans. People take out personal loans for personal reasons. For instance, you can capitalize on a personal loan’s lower interest rate to pay off your credit card debt in a jiffy and minimize interest charges. Keep in mind that the loan amount you are eligible to borrow depends on your financial standing. Lenders will take your income and existing debt obligations into account when working out a loan amount to offer you.
Eligibility & Fees
To be eligible for a debt consolidation loan, you have to be a Singapore Citizen, Singapore Permanent Resident or foreigner with a valid Employment Pass or Work Permit aged between 21 and 60 years old. You must be gainfully employed and earning a minimum monthly salary of $X,XXX.
For Singaporeans / PRs:
Are debt consolidation loans good for my credit score?
Yes, but you need to make your monthly repayments punctually and consistently.
Will your debt consolidation loan amass all my current loans, including those from other moneylenders?
Yes. Our debt consolidation loan can help consolidate your existing debt with other financial institutions into a single plan for easier repayment.