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Is It Good to Apply for Debt Consolidation in Singapore?

A DPC in Singapore can put together loans that are unsecured under a bank at a small interest rate if you have outstanding balances across other banks. A different scheme is available that is not limited to participating banks. There is no restriction on combining unsecured debt, including debts owed to banks and financial institutions, licensed moneylenders, and loan societies, as well as debts owed to family and friends. Find out more about Singapore’s Debt Repayment Scheme here.

To put it simply, a consolidation loan like consolidation loan Singapore for example is one single loan with a low-interest rate that covers all of your loans with higher interest rates. Instead of paying several loans, you only have to pay one.

For daily necessities, you will also receive a revolving credit limit of 1x your monthly income. This is equivalent to an emergency fund. You can think of it as an emergency fund. It is best not to splurge with this credit, as you will only add to your outstanding balance!

It can become hard for you to be able to track what you are owing and what you might have paid if you are owing different banks. Maintaining track of the various interest rates charged by other credit facilities can also be confusing. There are times when you may forget to pay a loan’s minimum balance, resulting in hefty interest charges for late payments.

The Debt Consolidation Plan can help. It works by combining all your payments into one single account. It can help you with understanding what you owe.

Consolidating Your Debts: Is It A Good Idea?

Self-discipline is required, but it is possible. The interest rate is determined by the outstanding loan which you owe. The cumulative interest rate of several loans will cause your due balance to snowball, leaving you in a perpetual debt trap that may be impossible to escape. Debt Consolidation Plans offer lower interest rates to help you alleviate your debt burden.

What Does This Consolidation Of Debt Work?

A Debt Consolidation Plan involves the bank purchasing your outstanding amounts from other banks and replacing them with a new loan with a lower interest rate.

Each bank has an amount you can borrow throw Debt consolidation.

As an applicant, if it is your first time applying for a loan like legal loan Singapore for instance, you should bear in mind that you will be granted a 5% additional allowance which is above the debt consolidation loan by the financial institution to cover any other fees that might have been gotten during the time the loan approved and given to the creditors.

After any new costs during that period are satisfied, the bank where you applied for the Debt Consolidation Plan will reimburse any remaining allowance to you.

What Effect Would A Debt Consolidation Plan Have On Your Credit Bureau Singapore Credit Rating?

In a nutshell, yes. However, with a slight pinch of good.

Defaulting on your loan will affect your credit rating if you owe several creditors and are usually late in repaying them. Particularly when you have to juggle multiple due dates, this is quite common.

When you pay off loans using the debt consolidation plan, which is essentially for another loan, it could help boost your credit score. In exchange, you repay the loan on schedule. If the debt to the credit ratio is lowered, it could improve your credit ratings. Consequently, your record will be immediately updated with the “Debt Consolidation” product code because DCP is seen as an unsecured credit product.

As with other credit products, your Debt Consolidation Plan will remain on your credit bureau report for three years after completion.

What is the Eligibility of Debt Consolidation?

To be eligible for the financial obligation Loan Consolidation Plan, you need to fulfil the following requirements:

  • Be a Singapore Person or Permanent Local;
  • Have overall interest-bearing unsecured financial obligation on all charge cards as well as an unsafe credit score that exceeds 12 times of monthly income.
  • Income between S$30,000 as well as below S$120,000 per year with Net Personal Assets lesser than $2 million;


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