If you are reeling under the burden of high-interest debts in Singapore, one of the best solutions is debt consolidation. But how does it work? Debt consolidation combines multiple debts, mainly high-interest debts but especially credit card-related bills, into a single monthly payment. Because it entails taking a loan to tackle other debts, you might be having some questions about its application.
To help you make the right decision about debt consolidation plans in Singapore, here are some answers to the frequently asked questions.
Will Debt Consolidation Clear All My Debt Problems at Once?
When it comes to debt consolidation, you need to acknowledge that it is not a quick-fix solution to your debt problem. If you find a financial organization indicating it has a debt consolidation plan that can clear your debts in one or several months, they are not truthful. So, be on the lookout for these too-good-to-be-true deals because they are likely to pull you deeper into debts.
How Will Debt Consolidation Impact Your Credit Score?
When you have multiple debts, especially high-interest ones that are proving challenging to repay, they are likely to pull down your credit score. This can have serious implications for your finances because a poor credit score will make financial institutions view you as a high-risk party. However, using a good debt consolidation plan in Singapore can help to improve the score.
Once you take the debt consolidation loan, the immediate impact might be a slight drop in your score. Well, that is expected because you are adding a new debt into your portfolio. As the debt consolidation plan clears the outstanding debts, the score will start moving up. As you continue repaying the “new” debt consolidation loan, your credit score will improve further, and this might be your moment to regain control of your finances.
What Are the Main Requirements for Getting Debt Consolidation Loans in Singapore?
To get a debt consolidation loan in Singapore, you need to be either a citizen or permanent resident of between 21-65 years. Besides, you also need a stable income of $30,000-120,000. Another requirement is that the debt has to be more than twelve times your monthly earning.
Can I Borrow More Money after Signing a Debt Consolidation Loan in Singapore?
The primary goal of taking debt consolidation is to reduce your debts and get back in control of your finances. Therefore, you will be disallowed from applying for a new credit card or bank loan before the current debt is reduced to convincingly manageable levels. For most lenders in Singapore, the requirement is that the debt must be reduced to lower than eight times the monthly income.
What Is the Most Important Thing to Think about When Taking a Debt Consolidation Loan in Singapore?
When you think of a debt consolidation plan, it is important to acknowledge that it is a loan just like others. Therefore, the most important things to consider are the interest rate and the loan term because these two factors determine the final term limit. Besides, it is also crucial to factor in personal repayment ability, and compare the conditions of different lenders.
The surest way to get a comprehensive comparison of debt consolidation loan factors and only pick the best lender is using Lendela. Once you apply for an account with them and apply for a loan, they will check the best lenders on your behalf, notify you, and book an appointment. As experts, they present you with the best opportunity to pick a reliable and secure lender for a debt consolidation loan.