5 Benefits Of Taking A Debt Consolidation Loan In Singapore

A debt consolidation loan is a loan that is borrowed by an individual to pay off a series of smaller loans. Instead of making multiple repayments for many small loans, debt consolidation loans enable the borrower to pay them to just one lender, with a significantly lower interest rate.

Aside from your credit score, here are a few other requirements to qualify for a debt consolidation loan in Singapore.

  • You have to be above the legal age (21 years old)
  • You reside in Singapore currently
  • Proof of employment
  • Monthly income records that ensure the borrower is capable of repaying the loan over the stipulated time

If you find yourself deep in debt and are seeking a more convenient and manageable repayment plan, you should consider taking out a debt consolidation loan. Here are some of the key benefits you can enjoy with the loan.

1. Cost-efficient

Debt consolidation loans offer a lower interest rate when compared to most other loan types. You’ll be able to transfer all your outstanding unsecured loans to one loan with a fixed interest rate starting from 4%. The actual interest rate will be determined by your credit score, amongst other factors. This makes the loan an excellent way to manage your mounting debts.

2. Time-saving

A debt consolidation loan is a monthly installment loan in Singapore that enables the borrower to make fast and convenient payments. This is because they will only have to pay to a single licensed moneylender, rather than to many, making it easier for the borrower to track their payments every month.

3. Higher credit score

One long-term benefit of a debt consolidation loan is that you can improve your credit score. Timely payments and fewer outstanding loans can benefit your score.

With a higher credit score, it will be easier for you to make better financial plans in the future and seek better loans with a lower interest rate. This is because financial institutions and licensed moneylenders like to deal with trustworthy and efficient borrowers.

4. Option for no collateral

Debt consolidation loans are available in three different forms, secured, unsecured loans and balance transfers. When obtaining a secured loan, financial institutions and licensed moneylenders seek collateral, such as an expensive asset, from the borrower as a type of security. An unsecured loan does not require a collateral. This frees the borrower from having to worry about potential seizures and foreclosure of their assets.

The third type of debt consolidation loan is balance transfers, which is similar to a short term loan in Singapore. Balance transfers are when you move the balance of one credit card to another with a lower interest rate.

5. Overall improved lifestyle

With a debt consolidation loan, it can significantly reduce financial stress for you as you will not have to worry about paying off a mountain of debt. It also makes your repayment plan simple and less troublesome, allowing you to focus on investing your time and funds into other vital aspects in your life. This plan also offers a way for you to manage your finances better not just in the short-term, but for the future too.

Conclusion

Understanding the benefits of debt consolidation loan allows you to know when you should take it, and how it can improve your financial future. Many borrowers who are strapped for cash due to piling debt can seek a debt consolidation loan and slowly rebuild their finances while making better financial decisions.

Should you find yourself dealing with different debts and loans, a debt consolidation loan can also help you to reorganise all of your bills into one single monthly payment.

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