Whether it is to renovate a house or buy a new car, debt can happen and rapidly culminate in hard-to-manage monthly bills on your loans. It is true that this can, at times, be unavoidable, but the most important thing is how you decide to handle the situation. One of the best ways out of the problem is using debt consolidation in Singapore.
If you want to use debt consolidation, it is important to start by gathering as much information about it as possible. You should also only borrow debt consolidation loans from trusted and reliable lenders. Here are answers to common questions about debt consolidation plans in Singapore.
- How Does Debt Consolidation in Singapore Work?
Debt consolidation involves taking a new loan to clear out smaller debts, loans, and bills that one is currently paying. This effectively brings all the debts together into a single loan that you can pay with a single monthly payment. See – you will not have to deal with multiple creditors every month.
It is important to appreciate that debt consolidation in Singapore only covers unsecured loans. Therefore, if you are servicing a mortgage, it will not be part of the debt consolidation plan, and it is important to plan how you will continue repaying it separately.
- Can Debt Consolidation Loan Help to Lower Interest Rates?
Although taking a loan to pay another might sound counterintuitive, we must indicate that a debt consolidation plan can be a good idea because it is likely to push down the interest rates. For example, most debt consolidation loans are charged 8.5% and 10% pa, which is way lower compared to the 24% 27% per annum interest tagged to credit card loans. The reduced interest rates mean three things:
- The cost of the loan is low.
- You can clear the loan fast.
- Managing the loan will be easy.
- Is it Possible to Take another Loan when Paying a Debt Consolidation Loan?
The primary goal for taking a debt consolidation loan in Singapore was to reduce debts; therefore, continuing to take more credit will render the entire plan useless. This is why people who take debt consolidation plans are disallowed from more loans until the debt is pulled down to about eight times their monthly income. Here are some adjustments you can make to release some cash instead of borrowing:
- Reduce the number of holidays you take every season.
- Consider riding to work a few days of the week instead of driving from Monday to Saturday.
- Carry food from home instead of eating from an expensive restaurant every day.
- Is there an Alternative to Debt Consolidation?
If you fail to qualify for debt consolidation, one of the best alternatives is taking a personal loan. A personal loan, just like a debt consolidation loan in Singapore, is an unsecured type of credit. However, you will have the responsibility of using the personal loan funds to pay the current loans. Therefore, make sure to factor in all the loans, applicable charges, and ensure the funds are directed into clearing the existing debts.
Apply for a Debt Consolidation Loan though Lendela
Now that you know how debt consolidation loans in Singapore work, the process of application can be tricky because there are so many lenders. The better method of applying for loans is through comparison sites, and a great example is Lendela. They simplify the process so much, and it only takes a few steps to apply and get the loan approved. Here is the process to follow:
- Visit Lendela site, open an account, and make an application for debt consolidation.
- Get offers from different lenders.
- Lendela helps to identify the best and books an appointment for you.
- Sign the debt consolidation loan.
In this post, we have answered the common questions about debt consolidation loans in Singapore. During the loan application, make sure to work with experts, such as Lendela, to help you identify the trusted lenders with the best conditions.