All debts aren’t created equal: Why debt consolidation loans in Singapore are your best option.

Do you want to take out a loan in order to repay another loan? It may sound ridiculous on the surface, but a consolidation loan for debt is designed specifically for this purpose. It is becoming more common for people to realize that a consolidating loan in Singapore is not just a viable financial option, but also a valuable one high quality Debt Consolidation.

This post will explain why debt consolidation has become so fashionable, whether you can qualify, and how to apply.

How are debt consolidation loans different?

Most people associate debt with the typical scenarios of a home loan, car mortgage, credit card bills, and any other personal or commercial loans. Every debt you get with a different creditor like a bank and credit card companies or licensed moneylenders comes with its specific terms.

These terms are, among others, the:

  • Monthly repayments amount, minimum and specific
  • date when the amount is due
  • There is an interest rate applied to the amount owing.
  • The term of the loan

Different companies also have very different fees and penalties when late or missed repayments are not made on time. This can lead to costly mistakes for the average debtor dealing with multiple creditors, loan terms, and lenders.

Private debt consolidation lenders are different. They ‘buy’ loans from the original creditors and then pay the borrower the amount owed. They consolidate the total amount paid to creditors into a single principal debt consolidation loan.

Although your total debt does not change significantly, there are 3 main benefits of a consolidating loan in Singapore.

1.Simplicity

Consolidating debt eliminates the need for multiple lenders and their individual requirements. This is the biggest benefit of debt consolidation. It’s easy for the debtor know when and what they have to pay by having one monthly due date.

It is also helpful to know there is a fixed rate interest and only one set if fees or penalties are due in the unfortunate circumstance of a missed, delayed or unpaid payment.

2. Improved terms

Many banks and large financial institutions are eager for loans to be transferred to private debt consolidators, and then sell them at a lower price than their full value. Consolidation lenders are able offer better terms to you, including a lower interest rates and/or monthly repayment amounts.

These enhanced terms of debt Consolidation loans offer a solution for borrowers who are not able to pay their original lenders on a regular basis.

3.Credit insurance

Credit scores are affected by repeated missed payments, defaults on loans and missed repayments. With debt consolidation, terms are more favorable to timely repayments. This reduces the likelihood that a borrower defaults on a loan or misses a payment.

Consolidating increases your credit score and reduces the chance of you losing it. As the loan advances, the monthly payments add to your creditworthiness. This will make it easier to qualify for loans or credit cards.

Do you qualify for debt consolidation?

Consolidation Loans are not for people who are already in debt. Private Debt Consolidators Also consider these factors.

Number of loans

If you only have one debt (a car loan, a credit card, etc.), you are very unlikely to be approved. Borrowers who owe multiple creditors, and have many types of debt, are more likely not to be approved.

Previous defaults

Consolidation loan lenders often work with borrowers in financial trouble. They might be reluctant to loan money to borrowers with a history for defaulting on loans. This is often due to their assessment of risk.

However, lenders may still approve them and impose stricter conditions. Other debts might not be included in the consolidation loans.

Applying to consolidate debt

A Singapore debt consolidation loan can be applied for slightly slower and more complicatedly than other loans.

All required documents for consolidation will be requested, such as regular identification and employment papers. The lender will then contact applicant’s creditors in order to transfer the loans. This process may take between one and three weeks.

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