Debt consolidation is a great option if you are looking for ways to manage your finances, settle your debts, or file for bankruptcy. In a nutshell, debt consolidation is a single loan that helps you disburse multiple loans simultaneously. It's mandatory to compare debt consolidation plans in Singapore.
After immense research on the web, we have created a comprehensive guide to help you understand how to consolidate debt and gain insight into some of the best debt consolidation plans in Singapore.
We hope that this exposition guides you in effectively and efficiently managing your financial transactions.
Best Debt Consolidation Plans in Singapore
Before we understand how to consolidate debt or the various debt consolidation plans in Singapore, it is important to understand this phenomenon’s true meaning.
As mentioned above, debt consolidation is an effective single transaction that helps you pay out multiple loans. It is a great initiative to reduce your interest rates and monthly payments.
Benefits Of Debt Consolidation Plan in Singapore
There are many potential benefits of a DCP and a few drawbacks that individuals need to consider before finding the best debt consolidation plan in Singapore for them.
1. Helps Repay Debt Quickly
One perk of claiming an effective debt consolidation plan is that it helps individuals repay their debt sooner. In simpler terms, it puts them on a faster track to completely be debt-free.
2. Easy Financial Management
Another benefit of acquiring a good DCP is that it helps simplify your finances.
When you consolidate your debt, you don't have to worry about multiple due dates to pay your debts. This yields an easy budget forecast and creates few opportunities to miss payments.
3. Lower Interest Rates
Personal loan interest rates are influenced heavily by your credit score, the amount of the loan sanction, and the term length. If you have an effective debt consolidation plan, you are more likely to get a lower interest rate on your personal loan.
Like a double-edged sword, debt consolidation plans have their own set of drawbacks which can have a significant impact on whether or not you consider the plan.
Drawbacks of Debt Consolidation
1. Not a Permanent Solution
The first and foremost disadvantage of a debt consolidation plan is that it is not a permanent solution to solve all of your financial problems.
Even though it offers monthly income for individuals, it doesn't assure individuals that they will not go into debt again. Therefore, it is often recommended to reduce financial habits that get you in trouble, such as overspending.
2. May Lead To Additional Expenditure
Another disadvantage of a debt consolidation plan is that it may add to your costs, increasing your expenditure. Debt consolidation plans are often inclusive of certain fees such as loan origination fees, closing costs, balance transfer, and annual fees.
Hence, it is advised for individuals to do thorough and careful research and think about the fee of any debt consolidation plan before committing to one.
Best Debt Consolidation Plans in Singapore 2021
To manage your debt in Singapore, we have formulated a comprehensive guide of the best debt consolidation plan in Singapore 2021. This list sheds light on some of the most flexible and affordable plans varying as per the taste and preferences of individuals.
1. Lendela
At the top of the leaderboard as one of the best debt consolidation plans in Singapore is Lendela. With its low interest rate and impeccable customer service, this plan has been by far the best option for low-income borrowers.
One of the unique features of Lendela is that it offers its customers a flexible and fast financial plan and disbursement. In simpler terms, it is the one-stop solution for individuals that need a personal loan but are not qualified for it.
Many people often wonder what makes this company stand out from its competitors in the market. The answer to that was quite simple. Lendela offers its customers the cheapest personal loans available and caters to them as per their profile, needs, and requirements.
In other words, it compares the best rates offered by financial institutions in all parts of Singapore and ensures that their prospective borrowers get the best plan for them. It's always good to compare debt consolidation plans in Singapore before applying.
Another outstanding feature about this particular financial company is its transparency towards borrowers. Additionally, Lendela ensures that an individual’s loan is disbursed within a day.
The cherry on the cake with this particular DCP is that the interest on the loan is quite low compared to other debt consolidation plans in Singapore, i.e., from 0.8%.
On the whole, Lendela is the way forward if you are looking for cost-effective and affordable debt consolidation plans in Singapore.
2. HSBC
Another renowned option for the best debt consolidation plan in Singapore is the plans offered by HSBC. Extolled for its personal loan duration and competitive interest rates, this company has created one of the most affordable options for borrowers who are in need of a long-term solution to file their debt.
One of the special features of this consolidation plan is that the company charges competitive rates for its loans ranging to a maximum repayment tenure of 10 years.
Due to this long tenure, HSBC stands to be one of the best lenders in Singapore for long term debt consolidation plans.
3. Maybank
If you’re on the hunt for the best debt consolidation plan in Singapore with a competitive promotional interest rate, then Maybank is your ideal match. This particular bank is renowned for its promotional interest rates, and the perks and benefits that apply to its loyal customers.
Maybank extends its promotional interest rates as low as 3.8% for borrowers, making it an outstanding yet affordable option for individuals.
However, it should be noted that this particular company does not guarantee its debt consolidation loan interest rates. In simpler terms, the rates are heavily influenced by several factors such as fee, income, repayment tenure, etc. and vary accordingly.
Despite this drawback, this particular institution has created an effective plan for individuals who are able to secure its competitive rates.
4. DBS
When speaking about the best debt consolidation plan in Singapore, it is hard to miss the plans offered by DBS on your list.
The DBS debt consolidation plan is a single account for all your existing loans and a revolving credit facility for your day to day expenditure. The main advantage of this particular plan is its tenure.
Depending on the plan of your choice, it may range from 1 to eight years with a fixed interest that is dependent upon the length and size of the loan.
Another outstanding feature of the plan offered by this particular bank is its revolving credit facility.
When you become eligible for the debt consolidation plan, you will automatically be receiving the company's visa platinum credit card for your day to day expenditure.
Nonetheless, this card is meant to be a convenient payment method for your daily essentials, and it's completely optional to use. The best part about this credit card is that there is no fee required to acquire it.
Overall, this particular debt consolidation plan is an ideal choice for individuals with multiple unsecured debts, as it helps them manage their payments and debts better.
How To compare Debt Consolidation Plans In Singapore?
Finding the best debt consolidation plans in Singapore is not standardised for everyone. In simpler terms, it tends to vary from individual to individual.
Therefore, when deciding the right one for you, it is important to contemplate two factors. They are the type of debt you would like to pay off and your credit score.
Let’s delve deeper into each of these factors to better understand debt consolidation plans.
1. Type of Mortgage
Debt consolidation loans can either be unsecured or secured. Each type of loan has its own set of pros and cons that may influence your final decision to choose a loan.
1. Secured Consolidation Loan
The first type of loan is a secured loan. In their basic sense, these types of loans require you to place collateral to secure the repayment of debt.
For example, if you take a mortgage loan, your house stands as the bank’s security. If you fail to repay the debt, the bank can foreclose your home to clear the loan.
The biggest advantage with such types of loans is that they tend to lower interest rates than unsecured loans. Plus, they are easily attained as they tend to have a lower risk.
However, as you pledge certain assets for security, these assets are at potential risk. Therefore, if you tend to default on the payment of your debts, then you can lose some of these assets.
2. Unsecured Consolidation Loan
As a counterpart to secured consolidation loans, unsecured loans in Singapore are based on trust and loyalty to repay the loan and don’t require you to pledge any collateral.
The primary advantage of an unsecured consolidation loan is that there are no assets or property at risk. Even though there is a higher interest rate than secured loans, it tends to decrease the weight on your shoulders.
Unsecured loan interest rates are heavily dependent upon several factors such as credit scores. Thus, if you don’t have a good credit score, then you may not be eligible to avail the benefits of lower interest rates
2. Credit Score
The last but not the least factor that helps you decipher the right debt consolidation plan for you is your credit score.
In its rudimentary form, a credit score is a value that ranges between 300 and 850 and is an indicator of a consumer’s creditworthiness. It helps lenders evaluate the probability of borrowers repaying their loans on time.
A rule of thumb to keep in mind is that the higher the credit score, the better a borrower looks in the eyes of potential lenders.
Best Debt Consolidation Plans In Singapore: Are you ready?
From the above discussion, it is quite evident that finding the best debt consolidation plans in Singapore requires careful and thorough thought. It is advised to think about the type of loan you’d like to apply for, as well as its tenure, fees, amount and credit score.
Plus, if you are on the colossal journey to find the best debt consolidation plans in Singapore, make sure to try out some of the plans mentioned above, as they are some of the best out of the entire lot.
