Credit Counselling Singapore (CCS) says over 13,000 Singaporeans are repaying their debts through bank Debt Consolidation Plans. With an average monthly salary of S$3,359, the average personal debt is S$100,559. However, what is a debt consolidation plan? Is that right for you?
Debt Consolidation Loan Singapore is ideal if you’re trying to manage your money, pay off your debts, or declare bankruptcy. It is essentially a single loan that lets you disburse many debts simultaneously. It is necessary to compare debt consolidation plans in Singapore.
This guide covers everything you need to know about debt consolidation, including the best debt consolidation plan, urgent debt consolidation loans, and more.
What is a Debt Consolidation Loan?
A debt consolidation loan is a personal loan that helps you pay off all your other existing loans, often at a lower interest rate. Taking out another loan to pay back your prior loans might seem contradictory, but when utilized correctly, debt consolidation can help you pay off several bills over time.
Simply put, a debt consolidation loan consolidates all your existing loans into one. In this manner, you avoid making payments on multiple dates, with varied interest rates, and in different loan installments. You’d simply have to make one monthly payment, which would cover all of your other bills.
Another option in Singapore is a debt consolidation plan (DCP), a debt refinance scheme that allows people to combine their unsecured debt with a single financial institution. This covers debt of any kind, including credit card loans.
A debt consolidation loan can help you manage your bills from various credit facilities, including credit cards and personal loans.
It combines all unsecured, credit-based loans into a single loan payment with a single lender. Because your single, freshly merged loan has a lower interest rate, you pay less each month.
Should You Get a Debt Consolidation Loan?
Depending on your financial status and total debt, this may not be a practical option. You should only think about debt consolidation plan Singapore
- If you have a lot of debt from various financial institutions, it is split between several loan programs with varied interest rates.
- The fees and credit checks associated with debt consolidation would not be worth it if your debt was minimal and could be paid off within a year.
- Some debts result from irresponsible behavior and spending beyond your means, while others result from unforeseen circumstances like medical emergencies. Before considering debt consolidation, you need to assess your spending patterns, review your budgeting techniques, and develop a strategy to reduce and manage your expenditures. You risk getting into even more debt if you don’t organize your finances before merging your debts.
- Remember that debt consolidation aims to obtain a new loan at a lower interest rate rather than just having one loan to manage. Therefore, the interest rate of your debt consolidation loan should be lower than the rate of all your existing loans. In this manner, you can drastically reduce the money you spend on interest.
- Applying for debt consolidation should only be done if you believe you can quickly pay the new monthly loan amount with your current cash flow. Although your consolidated loan may have a cheaper interest rate, it can be challenging to repay it if you frequently have trouble making your loan payments.
Eligibility for a Debt Consolidation Loan Singapore
A debt consolidation plan (DCP) is more challenging in Singapore than a debt consolidation loan. Only Singaporeans and permanent residents (PRs) are eligible for a DCP.
- It can cover unsecured loans with high interest rates and a total quantum of over 12 times your monthly income.
- Includes personal loans, credit cards, and credit lines.
- Has a ten-year maximum loan term.
To qualify for a DCP, you must:
- Be a permanent resident or a Singaporean.
- Make between $30,000 and $120,000 a year.
- Possess personal belongings worth less than $2 million.
- Possess personal loans or credit card debt that is unsecured and exceeds 12 times your monthly salary.
In contrast to a typical debt consolidation loan in Singapore, a DCP does not apply to foreign nationals or those whose total debt is less than 12 times their monthly income.
Additionally, a debt consolidation plan cannot be used for:
- Business credit lines
- Business loans
- Car loans
- Education loans
- Housing loans
- Joint accounts
- Medical loans
- Renovation loans
How to Apply for a Debt Consolidation Plan
The application is where it all begins. Applying for a debt consolidation plan in Singapore is simple with Golden Credit. Here are the primary procedures to follow after submitting your application.
Prepare the Required Documents
The documentation needed for a debt consolidation plan may differ slightly depending on your chosen bank. However, most of Singapore’s banks offering debt consolidation plans typically demand these documents.
- Your credit score is shown in the most recent credit bureau report.
- Your NRIC photocopy, front and back.
- Current income records for the last three months.
- Your existing loan providers’ most recent credit card and unsecured loan statements.
- A confirmation letter that lists the unpaid amounts for your installment plans and unsecured credit card.
Wait for your Debt Consolidation Plan Approval
After reviewing your application for a debt consolidation plan, the bank of your choice will ask you to sign an agreement if you qualify. Golden Credit will assist you in setting up a time to sign and transfer to the debt consolidation plan at the bank’s office. It’s crucial to properly study the agreement and seek clarification if necessary.
Notably, most banks consider the possibility that expenses may arise between the approval of the loan and the time the funds are deposited into your account. As a result, the loan provider may receive a small amount of extra money—roughly 5% of the total amount authorized for the debt consolidation plan.
Start Repaying for the New Consolidated Loan
You can begin making a single monthly payment on your current loans as soon as the debt consolidation plan goes into effect. Be sure to adhere to the terms and conditions of the repayment agreement. After a while, sketch out the payback plan and evaluate if your credit score has improved considerably. Ask for a refinance of the debt consolidation plan if significant modifications exist.
Benefits Of Debt Consolidation Plan Individuals need to consider
There are many potential needs to consider before finding the best debt consolidation plan in Singapore for them.
- Helps Repay Debt Quickly: One benefit of claiming a successful debt consolidation plan is that it enables people to pay off their debt more quickly. Put another way, it puts them on a quicker path to debt freedom.
- Easy Financial Management: A solid DCP makes managing your money easier. Multiple due dates for debt payments are eliminated when you combine your debt. This makes budget forecasting simple and reduces the likelihood of missing payments.
- Lower Interest Rates: Your credit score, the size of the loan sanction, and the term length significantly impact personal loan interest rates. If you have a successful debt reduction plan, you are more likely to receive a lower interest rate on your loan.
Tips to Manage Debt After Consolidation
Once you secure a Debt Consolidation Loan Singapore, follow these tips:
- Stick to a budget
- Avoid new debts
- Pay on time
- Monitor credit score
Need help? Golden Credit offers financial counseling with the best debt consolidation plan.
Conclusion: Take Control of Your Debt Today!
The best strategy for handling several debts is to take out a debt consolidation loan in Singapore. Golden Credit provides the ideal Singapore debt consolidation plan for your requirements with reduced interest rates, adjustable payback terms, and speedy approvals.
For urgent debt consolidation loans, choose Golden Credit.
- Low-interest rates
- Quick approval
- Flexible repayment
- Trusted licensed moneylender
Don’t let debt control your life. Apply now for a Debt Consolidation Loan in Singapore and take charge of your finances!
