Debt consolidation plans may sound complicated, but they are sophisticated solutions to help those that hold debt stemming from multiple sources. Many debt consolidation companies in Singapore specialise in helping out this niche group of borrowers.
If you find yourself wanting to consolidate your debt but are not sure how to begin, here are some of the basics of debt consolidation loans to help you feel confident as you take up your loan.
What are debt consolidation loans?
Debt consolidation loans are refinancing programmes that consolidate all existing unsecured loans into a single financial institution. The nature of your loans can be varied and held at various financial institutions before consolidation.
Instead of trying to keep track of multiple loans, a moneylender in Singapore can help you to pool them into a single loan with a fixed interest rate and due date. Once your application has been approved by the bank or lender, your outstanding debt account(s) will be closed.
Benefits of debt consolidation plans
One of the benefits of debt consolidation plans (DCP) would be the chance to obtain lower interest rates for your consolidated debt. The interest rate of your unconsolidated debt could be high, especially if it includes mainly credit card debt. Debt consolidation companies may offer much lower rates, allowing you to clear off your debts much faster with savings in interest payments.
Another benefit of DCPs would be the flexibility to choose your loan tenure. Although they come with certain constraints, you can select a loan tenure to make monthly payments more manageable. The longer the term you choose, the lower the amount you have to pay for each month. However, do note that with a longer tenure, you will be paying more interest overall.
In Singapore, debt consolidation plans are only applicable to loans you borrow from participating financial institutions within Singapore, excluding joint accounts, renovation loans, education loans, medical loans, and credit facilities granted for business purposes. Do also note that due to the nature of the plan, you can only have one active debt consolidation plan at any time.
To be eligible to take up a DCP, you need to:
- Hold Singapore Citizenship or be a Permanent Resident;
- Have an annual income of between SGD 30,000 to SGD120,000; and
- The total interest-bearing unsecured debt on all credit cards and unsecured facilities exceed 12 times your monthly income.
First and foremost, you should do your homework and track your debts to see how far you are from repaying them. If you find yourself struggling to keep up with the details of the different debts you might be holding, consider speaking to a licenced money lender in Singapore to find out about the debt consolidation plans they offer.
For starters, if you are looking for a licenced money lender in Hougang or Toa Payoh, Goldstar Credit could be a choice for you. If you still find yourself unsure about the details of debt consolidation, reach out to us at +65 6384 0088, and our team would be happy to assist you on your route to a debt-free life.