Guide On Debt Consolidation Plan: What You Need To Know?
Learn how to combine your loans into one single loan from a licensed moneylender. Save on interest payoffs with our guide on a debt consolidation plan in Singapore.
Your card is maxed out. You’ve taken a personal loan from the bank for your dad’s medical emergency hospitalisation. You’re struggling to pay your car loan on time.
The stress is getting you as you get irritated and snap at loved ones for trivial reasons.
Piling debt, late payment fees, high-interest rates – this is the sad reality of many Singaporeans.
Modern living with its high costs and stagnant income has pushed them into a debt cycle.
The more loans you take, the longer it takes to repay. You end up shelling out a lot of money on interest alone.
It becomes difficult to keep track of the payments made and the ones due. Seeing the bank account in red more often, can add to the stress.
Not to mention the associated risk of facing relentless and angry lenders. Is there a way out of this inadvertent mess you find yourself in?
The 3-word answer says it all – debt consolidation loan.
Debt consolidation empowers you to manage your many loans and track your finances.
As you have one repayment to focus on, you ensure you pay on time every month.
You can avail of better interest rates and save some cash in the process.
What is a Debt Consolidation Loan?
Before we go into it, let’s look at 2 common – yet unwitting ways of dealing with bursting loans.
1. ❌ Credit Card Minimum Payment
Credit card deals entice you with the convenient minimum balance payment option. What most customers fail to realise is this adds up.
You’ve high-interest rates, late payment charges and hidden fees to contend with. Your principal debt will take a long time to become a zero figure.
2. ❌ Unlicensed Money Lenders
How about taking a loan from an unlicensed moneylender? You’re in for a financial shock. They charge exorbitant rates of interest.
If that isn’t enough, some of their collection practices can be offensive and downright scary.
You’re stuck in the debt wheelhouse, racing to pay one instalment after another on time. Worse still, the debt never shows any sign of going away.
There is light at the end of the spiralling debt tunnel.
Secure a New Loan to Clear Outstanding Ones
Ask anyone who has taken multiple loans, especially from unscrupulous lenders. They’ll talk about being trapped in a never-ending cycle of borrowing and repaying.
If you happen to be one of these them, it’s time to take the debt bull by the horns. The first step is to take a hard look at your finances.
Make a note of all the debts you’ve accumulated. Look at the interest rates and the unpaid principal amount.
If you have a couple of small credit card debts, pay them off first.
Then use consolidation loans to pay off the total outstanding.
Basically it’s a fresh loan with a fixed tenure to cover all these unpaid debts.
I shall explain more below.
A Helpful Way to Control Your Debt
Control your personal debt with debt reconciliation loans. Reduce your loan burden with one fixed monthly payment.
A consolidation plan comes with favourable payment terms and lower rates of interest.
With the debt repayment scheme in place, you don’t have to worry about missing payments.
A single loan is more manageable than many loans with different due dates and interest rates. Reducing your debt is faster and easier this way.
Save Money and Achieve Lower Interest Rate
Are you still baffled by the thought of seeking another loan to pay off old ones? This is not an illogical suggestion, but a sound idea.
You get one loan to clear them all. You save on interest, ease your money woes, and reduce your stress levels.
Benefits of Debt Repayment Loan
Still not convinced? Let’s see how a debt repayment scheme can help you in the long run.
Lower Interest Rate
Firstly, with companies offering cheaper loans on a consolidation plan, you enjoy bigger savings.
Compare the repayment rates of many loans and credit card debt with this single loan.
You’ll find you save a lot more money with a single, consolidated loan at lower interest rate.
Next, you don’t have to deal with several interest rates and repayment options with multiple pieces of debt.
Some lenders may provide fixed interest rates. Others prefer flexible rates that change with accumulated and unpaid debt.
This makes it difficult to keep track of loans and repayments.
This not only costs you more money in interest payment but can throw your monthly budget off the rails.
Debt repayment schemes protect you from these financial uncertainties.
With lowered costs of taking a fresh loan, you save money. You can use these savings to investments in assets or for other beneficial purposes.
Easy Tracking of the Consolidated Loan
A debt consolidation loan works on the lines of a personal loan. You clear of all your other debts, secured and unsecured, with the loan money.
You have only one repayment schedule to worry about.
A single monthly instalment is easier to track than loan repayments with different due dates.
The best part is that you can customise this fresh loan to suit your needs and your repayment abilities.
If you have a tight budget, you can opt for smaller repayments over a longer period and vice versa.
If the lender allows it, you can prepay a part of the loan when you get a bonus, a sizeable monetary gift or a raise.
Tailored Loan Duration And Minimum Monthly Payments
With many loans, you don’t have a clear picture of when you’ll be debt-free.
With consolidation loan plans, know exactly when you’ll make the final payment. You know when you’ll finish repaying your loan.
Besides, these loans tend to have flexible tenure. Some have tenures up to 36 months.
You get enough time to clear your debt and put your finances in order. You feel calmer and relieves because you’ll finally escape the debt trap.
Quick and Easy Application
The process of combining your accumulated debts into a single one is simple and quick.
The application process doesn’t need too many documents.
How fast the loan amount gets disbursed depends on you. The sooner you opt for this debt merging, the faster the approval.
You avoid late payment fees and higher repayment rates. You save more when you club loans together as soon you realise the debt has become unmanageable.
One Single Payment Every Month
Imagine this: every month, you’ve got a credit card bill due in the first week.
In the second week, there’s a personal loan and another card EMI ($0 interest installment) to pay.
Every 18th, an unlicensed moneylender knocks on your door. Come 25th, your car and home loan need attention.
What if you had one repayment to make every month? Wouldn’t life be less stressful?
With a personalised debt repayment scheme, you choose when and how much to pay each month.
You tailor your payments around your income and family budget.
Get Debt Reconciliation Loans from Licensed Moneylenders
This repayment scheme from licensed moneylenders is a great option for debtors with bad credit scores.
If your loan application is likely to be rejected by the bank, this is the best course of action.
The Borrower has Unmanageable Amount of Debt
When you’re drowning in a sea of debt, the writing on the wall is clear. It’s time to buck up and rein in the debt beast with a combined loan.
How do you know when to choose a consolidation loan? If your loans are 6 or more times than your income, it’s time to create a new repayment schedule.
You don’t plan on being in debt. But sometimes, you end up borrowing more than you can afford to repay.
When that happens, seek the services of reliable and licensed money lenders. Choose a debt consolidation plan to tide over your financial difficulties.