What You Should Know About Debt Consolidation Loans in Singapore

According to the Department of Statistics Singapore, local households in the country have an average debt of S$55,112 per capita. This is an alarming statistic, especially since the cost of living and hosting businesses in the country are growing year by year without pause.

Some individuals and businesses have taken out loans and have debts to various creditors, often with varying interest rates and terms. If you are one of those people, dealing with everything can be overwhelming, and paying back numerous individuals on time can seem like a daunting task. For that reason, some people and business entities are finding it hard to pay their loans and debts to creditors on time. Some are resorting to declaring bankruptcy, and many are defaulting on their debts.

While declaring bankruptcy and defaulting on your debts are valid options when you do not have any choice left, you should look into finding solutions first before you decide to take that plunge. Bankruptcy and defaulted debts will leave a mark on your credit rating, and it will affect your ability to take out loans in the future. If you are in a financial bind, why not try taking out a debt consolidation loan?

Understanding debt consolidation

If you have multiple loans and liabilities, those will most probably have different payment deadlines, interest rates, and pay-off terms. Debt consolidation is all about gathering all your liabilities and debts, combining them into one, and paying them off using a new loan for a more streamlined debt payment process. There are two significant types of debt consolidation loans:

Secured Loans
Secured debt consolidation loans use the existing assets of the debtor to serve as collateral if the debtor would not be able to pay off their loan on time. Secured loans will typically have lower interest rates compared to unsecured loans and average credit card rates.

Unsecured Loans
Unsecured debt consolidation loans do not require the use of assets as collaterals, but the interest rates for such loans will usually be higher than that of secured loans. Unsecured loans are more challenging to acquire, and you will need to submit more proof of financial stability to obtain an unsecured loan.

It is important to remember that debt consolidation loans will not erase all of your existing debt. You are only transferring all your loans to one lender to make the payment process easier to handle.

Preparing for a debt consolidation loan

Before applying for a debt consolidation loan, you should try to manage and organise your debt. Here are some things you can do to do debt management efficiently:

• Perform your financial inventory
Before looking for a solution, you should take a look at the problem first and see how to best tackle the issue you are working with. Review your current financial state, list down your existing assets and liabilities, and calculate your usual income and expenses per month.

• Manage your cash flow
Now that you’ve reviewed your current financial status take a closer look at your cash flow, and see where you can cut costs. You should make sure that more money is coming in compared to how much is going out.

• Sell assets to lessen your debt
Identify assets that you are willing to let go of, and use the money you acquired to pay off a portion of your debt. That way, when consolidating your debt, the total value of your debt will be reduced already.

Debt consolidation loans requirements

The requirements before taking out debt consolidation loans will vary depending on the moneylender you approach. However, some documents will most likely be required if you want to apply for a debt consolidation loan:

  • Proof of Income / Employment details
  • Credit History
  • Equity
  • List of your current living expenses
  • List of existing debts (including the terms of your debt)

Make sure to prepare these requirements before approaching a licensed moneylender in Singapore. By doing so, you can have a smoother transaction for your debt consolidation application.

Take out your debt consolidation loan with us today.
We understand how hard it is to deal with numerous debts in Singapore, which is why we offer debt consolidation loans to people who may need to streamline their debt payment plan. With our help, you wouldn’t need to keep up with numerous payment deadlines, interest rates, and loan terms. We will only need to do the legwork on consolidating your debt, but paying off your loan from us will be smooth sailing from then on.

Our moneylending practice makes sure that we have a wide range when it comes to funding, an approval speed that won’t make you default on your debt, and interest rates that are fair for everyone involved. Let us help you pay off your debts on time! Contact us to know more.