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All About Debt Consolidation Loans


Debt is the sum that you owe to someone or any company. Before taking any loans or applying for debt consolidation, it is necessary to have someone who has the knowledge and provides you guide for a best personal loan and suggests the best debt consolidation loans.

What is Debt Consolidation?

Debt Consolidation is a financial scheme through which you can merge multiple bills into a single debt and pay it off through a loan. “Bill Consolidation” and “Credit Consolidation” are the other two names of debt consolidation.

When to consolidate debts?

Debt Consolidation is a great option to change your financial situation. If the rise in credit card balance or growth in your bills bothers you at the end of every month, then debt consolidation is something that you should consider. In short, through debt consolidation, the payments of bills get simplified.

When not to consolidate debts?

You must stop using the credit cards for a while if you plan to consolidate your debts. It is necessary to refrain from using credit cards because it helps in clearing the loans quickly. If you do not avoid, catching up to the bills will become a problem, and clearing debts will be a never-ending struggle.

Names of banks that provide debt consolidation loans in Singapore

There are various banks and financial institutions that provide the best debt consolidation loans in Singapore. Some of them are-

  • American Express International, Inc.
  • Citibank Singapore Limited
  • DBS Bank Ltd
  • CIMB Bank
  • Bank of China Limited, Singapore

Eligibility criteria for applying for debt consolidation loans in Singapore

A few criteria are needed for being eligible for applying for debt consolidation loans in Singapore. One must be a citizen of Singapore or a permanent resident there. The income should be between S$20,000 and S$120,000 annually; one must have interest-bearing unsecured debt on all the credit cards he possesses, and there should also be a provision for unsecured credit facilities with Singapore financial institutions. The unsecured credit should be twelve times as large as the monthly income.

The Documents required for debt consolidation loans in Singapore

One must have the following documents ready with them while applying for debt consolidation loans in Singapore:

– Copy of NRIC both front and back

– Credit Bureau Report of the recent time

– Recent income documents

– Report of credit cards or any unsecured loans statements

-A confirmation letter that evidences the clearance of all bills of the credit cards (if any)

Personal loans in Singapore

Numerous Singapore banks are ready to guide for best personal loan and provide loans in low-interest rates. For instance, UOB Personal loans provide Singapore loans with a meager interest rate of 3.68% p.a. Similarly, HSBC Personal loan offers a loan with an interest rate as low as 3.7% p.a.

However, some other banks like Standard Chartered Cash One Personal Loan, Citibank Quick Cash loan that guides for the best personal loan and offers loans at a lower interest rate.

 Best Debt Consolidation loans in Singapore

The top two banks said to provide the best debt consolidation loans in Singapore are HSBC. These banks offer debt consolidation loans at lower rates with 4% p.a. and 2.77% p. respectively and the processing fee on CIMB is just 1%. It offers an excellent opportunity for people who are willing to change in their financial situation.

Things to know about debt consolidation loans

Before applying for any loan, it is vital to know everything about it. These are a few things that one must know about debt consolidation loans.

1- The bills that you cannot fully pay off, simplify them.

2- Keep the interest rate as low as possible.

3- Make sure that no penalty damages your credit score.

4- Organise your financial habits.

5- Choose the money lender wisely. Many firms provide loans at a very low-interest rate, so it is better to search well before applying for loans.

6- Focus on the principle amount and try to pay it off as soon as possible. Do not keep on paying more interest.

7- Debt Consolidation gives you a chance to strengthen your financial status. It is crucial to set your goals wisely to change your financial standing.

Do’s and don’ts with Debt Consolidation loans

There are some do’s and don’ts that are crucial to know before taking debt consolidation loans.

Do’s:

– Look for a reasonable rate. Though the interest rate depends on your credit score in some parts, it is always beneficial to hunt for better options.

– After paying the debt, it is good to keep your credit cards open as it reflects your credit score. Paying the debt properly will show you as the right person who has a high credit score.

– Cut off your excess expenses and budget them accordingly. It is vital to plan your finance before taking any loan.

Don’ts:

– It is never advised to apply for more than one loan because applying for more and one or two loans hamper the credit score.

– The primary purpose of debt consolidation is to pay off your loans. So, it is always preferred to lower the use of credit cards as it will only keep on increasing your bills. Keep one card in hand for emergency purposes and lower the limit of that credit card so that you do not put up the load again.

– As it is essential to find a loan with a low rate of interest. Similarly, it becomes crucial to check that you do not pay high fees or extra fees while applying for any loan.

Problems faced when you fail to pay back the loan

In case you fail to pay back the loans, you will end up in specific problems like-

  • Employment difficulties.
  • Legal actions.
  • Your money might get seized from your account.
  • You might not get loans at the time of dire crisis or urgency.

To apply for debt consolidation loans is always a good idea, but it becomes essential to choose the money lenders wisely to get the best debt consolidation loans.

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