What is Debt Consolidation?
Debt consolidation is a combination of various debts such as medical bills, pay loans, credit card bills, etc. People with lots of debts on the head usually think about debt consolidation for a simplified debt-relief plan and an illusion of a lower interest rate.
You must keep the following things in mind when you are thinking about debt consolidation;
- There is no guarantee that the interest rate will be reduced; it’s just an illusion. You may get fast loansbut can ultimately pay more interest over time, and thus, in the end, you may wonder what the point was!
- Even if you got lower interest rates on Debt consolidation, it might change by time.
- While consolidating debt, your monthly payments will be lowered because the repayment period is longer. So actually debt consolidation can lead to prolonged debts. That’s why debt consolidation is alright if the percentage of monthly interest doesn’t affect you.
- You must not think of debt consolidation as debt elimination. It’s more like a journal where you write to put together your thoughts. Debt consolidation combines your debts but not eliminates them.
- Debt settlement and consolidation may be different, but both of them have the potential of money scams. That’s why it’s essential to choose a perfect place in Singapore for your debt consolidation.
When should you not consolidate?
First of all, you need to keep in mind that debt consolidation combines all of your debts, not eliminating them. This is why if you hope that debt consolidation can lower your monthly interest rate, and then you are wrong. Because after combining all of your dates and charged interest depending on, the moneylender will add additional charges like fees. And in the end, the whole matter may seem pointless to you.
Another thing you can do is check if the total debt consolidation amount is higher than half of your gross income. If the answer is yes, then you will be relieved from the confusion of whether or not to apply for debt consolidation.
So if you are hoping that you will pay off your debts with a loan but do not have a considerable monthly income, then forget about debt consolidation; otherwise, you will find yourself trapped in a more complicated situation.
How to choose the right moneylender for debt consolidation?
As we discussed before, debt consolidation can be useful, but there is still a chance of a scam. This means, if you are Consolidating debt to reduce the headache of a bunch of debts and lower the interest rate, in the end, you may end up paying double the rate. So a well-researched homework can only lead you to the right debt consolidation plan money lender.
Choose the correct agency
First, you need to shortlist a few debt consolidation agencies. Check the agencies’ works, read customers reviews, talk to a few previous customers, and start searching for the best debt consolidation companies in Singapore, because it is Google who can easily tell you if a company is good or not.
Compare the best personal loans
Some people choose to consolidate debt with their personal loans. In this method, one applies for a personal loan, predictably then chooses one with a low-interest rate, and then he uses the loan money to pay all the credit bills at once. If you choose to do so, then you better compare the best personal loans at first. Of Course, you will be focusing on the loan rate, but don’t forget about the loan terms.
Other costs
When you decide to choose a debt consolidation plan money lender, you must be aware that the money will obviously add some costs like fees, upfront charges, etc. Later they attract customers with attractive offers. But ultimately, even after applying for an offer, the borrower needs to pay extra money. That’s why while choosing a debt consolidation company, beware of the additional costs.
There are more things you need beware of;
- Some companies attract customers with attractive offers on debt consolidation, but in reality, after contacting you, they replace the plan with another product.
- Debt consolidation is a long term process. There is no way that the operation can end earlier. So if any company is saying, with them, your debt consolidation will be over within no time, and then take it as the warning bell.
How to get a debt consolidation loan?
Once you are sure about the fact that you are going to consolidate your debt and the decision is okay with your monthly earning, then follow a few steps and quickly get a debt consolidation loan.
- Credit Score
Check if your credit score is good enough because a lower credit score is ineligible for a debt consolidation loan. If you apply for debt consolidation with a low credit score, you will not get a lower interest rate.
- Make a list of all your debts
It is time for a manual calculation. Make a list of all your payments and debts, add up the total amount you have to pay, and add up the total amount you pay for individual interest every month. This is how you can make a budget and look for interest rates that fit in the budget.
- Loan Options
You must know that they are multiple options from where you can get your loan. For example, online money lender agencies, bank loans, and credit unions are basically non-profit organizations. All of the loan providers have different terms and conditions and choose one that perfectly fits your requirements.
- Apply for the debt consolidation loan
When you have chosen the company e to gather all the proofs and documents and apply for the loan:
- Enter all the details required such as personal, financial, and employment
- Choose the loan amount and get approval instantly
- Submit all the required documents. While applying online, you may have to submit the scanned copies of your original documents
- Then you will receive the money in your bank within the promised time
To apply for a debt consolidation loan, you must also fulfill the eligibility criteria, which depends on the moneylender of Singapore. But most of all, you have to be a resident of Singapore.