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Three easy steps to a debt consolidation loan in Singapore:
1. Apply with Lendela for a debt consolidation loan in Singapore
2. Compare debt consolidation loan offers from multiple banks
3. Select your loan and get the money
Our goal is to make your loan application process quicker, simpler and more transparent. As Singapore’s only true personal loan comparison service, we support you all the way from application to disbursement. Click below to read more about Lendela and how we empower thousands of loan-seeking Singaporeans every month.
Whether you borrowed money to purchase a new house or pay for a holiday, debt happens and can rapidly spiral to high-interest rates and tough-to-manage monthly bills. While this can, at times, be inevitable, what counts more is how you handle the debts. Debt consolidation is one of the top options for people in Singapore struggling with debt; it simplifies managing multiple debts by rolling them into a single payment plan. When compared to the aggregate cost of repaying individual debts, you will find that taking out a debt consolidation plan has a lower interest rate and can help to build a better credit score. This post is a comprehensive guide to help you apply for a debt consolidation plan in Singapore and to check your debt collection loan eligibility, so you can see whether a debt consolidation plan is your gateway to achieving financial freedom.
Debt consolidation plans in SG are only available to citizens and permanent residents. In addition, the following requirements should also be met to be eligible for a debt consolidation loan in Singapore:
You should have a stable income of between $30,000 and $120,000.
The outstanding balances on your unsecured loans should be more than 12 times your monthly earnings.
You should only have one consolidation plan at any moment. If you opt to refinance your debt consolidation plan, some banks in Singapore might be willing to offer some cash back.
Bear in mind that after enrolling in a debt consolidation plan, you will not be able to apply for a new loan or credit card until the outstanding debts fall to manageable levels. Most banks demand that the debt should be reduced to less than eight times your monthly salary.
It all starts with the application. You can easily apply for a debt consolidation plan in SG at Lendela’s website, for free. Once you have submitted your application, here are the main steps to follow when applying for debt consolidation plans.
Depending on which bank you decide to use for a debt consolidation plan, the required documents might vary slightly. However, most of the time, these documents are required by the majority of debt consolidation plan banks in Singapore.
Latest credit bureau report that indicates your credit score.
Photocopy of your NRIC (front and back).
Latest income documents (last three months).
Latest credit card and unsecured loan statements from your current loan providers.
A confirmation letter indicating the un-billed balances for your unsecured credit card and instalment plans.
The bank you select will review your debt consolidation plan application, and if you qualify, you will be asked to sign the agreement. Lendela will help you schedule an appointment at the bank’s office for the signing and for the actual transfer to the debt consolidation plan. It is important to read the agreement carefully and ask for clarification if anything is unclear.
Notably, most banks account for the fact that some costs might be incurred between the time of loan approval and when the money hits your account. Therefore, a small amount of additional funds, around 5% of the approved amount for the debt consolidation plan, may be released to the loan provider.
Once the debt consolidation plan takes effect, you will be able to start paying your existing loans with a single monthly payment. Make sure to stick to the agreed repayment terms and conditions; and after some time, draw the repayment path and check the progress of your credit score to see if it has improved significantly. If there are major changes, consider asking for debt consolidation plan refinancing.
Debt consolidation plans are meant to help get you back on track towards financial freedom, but it’s only effective if you are disciplined and manage your money wisely. Start by rethinking your monthly budget, factoring in not just the debt consolidation plan but all other debt obligations, such as mortgage payments and regular utility bills. If your spending habits don’t fit into your budget such that you can comfortably pay off your debts, find ways to cut back on expenditure, such as terminating unused subscriptions and memberships.
What pushed you into a long cycle of debt? If you can establish the cause of the current problem, it might be possible to avoid its recurrence. For example, did the current high-interest debts result from impulse borrowing through credit cards or poor payment planning? By understanding the cause of the problem, you are likely to be wiser and avoid self-sabotage after you’ve secured a debt consolidation plan.
Most creditors always check the credit scores of clients to determine their creditworthiness. Improving your credit score allows you to gain access to credit at a lower interest rate. Consider the following methods to improve your credit score:
Check Your Credit Score Report
Reduce Outstanding Debts
Increase Your Credit Mix
While a debt consolidation loan plan can be a good way to regain control over your finances, applying for it can be challenging because there are so many debt consolidation plan providers in Singapore. Instead of trying to go through every loan provider and compare their conditions, consider using a professional loan comparison site, such as Lendela.
Lendela makes the process of applying for a debt consolidation loan fast and easy. Here are the simple steps to take when applying for a loan through Lendela:
Visit the Lendela website to open an account and complete a short application form in only a few minutes.
Lendela will provide you with offers from different banks and financial institutions and help you to identify the best debt consolidation plan in SG.
You will be booked for an appointment to sign the debt consolidation plan.
Sign the debt consolidation plan and start making a single monthly payment towards clearing it.
Do not let high-interest debts wreck your financial health; you can regain control through debt consolidation plans. Use Lendela to identify the best bank and debt consolidation plan with the lowest interest rates in Singapore.Back to top
Learn all you need to know about debt consolidation in Singapore before applying for a plan. If you still have lingering questions about debt consolidation loans in Singapore or related services, feel free to reach out to Lendela and let our experienced team help you.
Debt consolidation is where an individual acquires a new loan to pay out a number of smaller loans, bills, or debts that he or she is currently making payments for. This action helps the creditor effectively combine different loans together and turn them into one. It helps to minimise monthly payments by lowering the interest rate, thereby making your debts easier to pay. This process is referred to as “consolidating” the loan.
In Singapore, a debt consolidation plan is used as a method of assisting Singaporeans and permanent residents who are trying to juggle several high-interest debts but find it challenging to meet the expected payments. It's key to financial freedom. Once your multiple debts are rolled into one with a debt consolidation plan, you can commence paying a single loan with a lower interest rate. It is important to note that debt consolidation plans are only used for unsecured credit facilities, such as credit lines, personal loans, and credit card loans, as opposed to secured credit.
Getting a debt consolidation plan allows you to enjoy a slew of benefits, but it is also very important to understand the following key concepts so you know what you’re getting into.
This is the cost of a loan. The moment the debt consolidation plan is approved, you will be required to repay the debt consolidation plan plus the interest.
This is the total amount that you will have paid by the end of the loan limit. It includes the loan (principal), the interest rate, and all applicable fees. If there are some penalties along the way, they will also be included.
This is the period when you are expected to clear the loan. The faster you can clear the loan, the less the amount payable will be as a result of the smaller overall interest costs.
Paying off your high-interest debts with a debt consolidation loan can allow you to enjoy the following benefits:
No more headaches battling numerous invoices and separate deadlines or fees. With a debt consolidation loan plan, you only need to make one payment each month. This will allow you to stay alert and pay off debts quicker than usual. No more missing statements and contemplating which loans to pay first – just focus on one bill.
Generally, credit cards have higher interest rates compared to other loans in the market. Another advantage of a debt consolidation loan is that it allows you to get a lower interest rate, indirectly helping you save money on each monthly instalment.
If you’re paying your loan consistently, you can improve your credit score. Having multiple accounts and making late payments significantly hurts your credit score. With a debt consolidation plan to roll all your debts in Singapore into one account, you can more easily stay on top of your monthly payments and rebuild your credit.
By taking control of your finances through a debt consolidation plan, it is easy to stay on top of every monthly payment. Now, you only have to deal with a single monthly payment, which is a lot more convenient than five or more. You can even ask your bank to always remit the payment money at a specific date to make following the loan schedule easy. The fact that you will end up in a better financial position is even more satisfying.
Credit card balances can have years to go before getting paid off in full. Indeed, these credit cards earn interest on the amount that you owe and banks do not mind much if you take five or ten years to clear the debt. A debt consolidation plan inherently factors a number of things, including credit score, the length of the loan, and the amount owed, to draw the best plan for you. As a result, debt consolidation plans in Singapore come with a shorter payback time frame, which implies that you can finally anticipate a life without debts.
With debt consolidation plans in SG, you do not have to put forward collateral to roll the current loans into one. That means there is no need to risk your house or car, but you still get to pull down the interest rates and make repaying the debts easy.Back to top
Here are some crucial dos and don’ts that you need to be aware of when going for a debt consolidation plan.
To ensure that you are getting the best debt consolidation plan in Singapore, it is crucial to compare the interest rates and pick the plan with the lowest one. When checking the loan’s interest rate, you should also understand that it is dependent on the loan tenure. A loan with a longer tenure will cost you more compared to another with a shorter tenure.
Debt consolidation plans in Singapore are offered by providers who might have additional features to help clients save money, such as promotional rates and complimentary insurance. Although these extras should not be the primary factors when selecting a debt consolidation plan, they can make it easier for you to decide between two potential debt consolidation plans.
A debt consolidation plan is designed to simplify how you pay off multiple loans, helping to take out juggling multiple bills and beating the due dates. However, to maintain a debt-free status, it is crucial to change your behaviour. Find ways of cutting down spending and supplementing your income. For example, if you go on holiday three times every year, slashing them to one or two can help to free some money for debt repayment. You might also consider taking a part-time job to raise additional money to boost your savings.
When you go for debt consolidation plans in SG, it is important to take your monthly instalments seriously. Missed payments will not only attract penalties but can also start pulling down the credit score that you had started improving. To avoid being late or forgetting to repay the monthly instalments for your debt consolidation loan, you can consider automating the payments and reviewing personal spending to shed off unnecessary expenditures.
When debts get too much for some people, they tend to hastily pick any plan tagged with big promises. However, you need to be careful with such "too-good-to-be-true" promises. For example, a debt repayment company that promises that you will become debt-free in only a few months after selecting a debt consolidation plan may be lying to you.
While it is true that using debt consolidation plans in Singapore is a great way to get out of debt, failing to understand how you got there increases the risk of you creeping back into old habits and getting into financial trouble once more.
By following these do’s and don’ts of debt consolidation in Singapore, you can be well on your way to clearing your debts faster and also creating a better financial future.Back to top
While the benefits of using debt consolidation plans are indeed clear, there are so many myths online, and it is important to know and avoid them. Here are the main ones:
While a debt consolidation plan can be a good stepping stone to help you wrestle debts down, it does not work for all. Because it is a loan, you are still adding the load of the total amount required to be paid. Therefore, if you are unable to control your borrowing, this plan might not be of great help. The best way to make a debt consolidation plan work for you is by developing good financial discipline.
This is another common misconception about debt consolidation plans in Singapore. The truth is that, like other types of credit, the loan you take under the debt consolidation plan will also affect your score. When you take the debt consolidation plan, the score is likely to dip slightly at first because of the calculation method applied by the Credit Bureau of Singapore. However, if you stick to regular monthly payments as agreed with your debt consolidation loan provider, your credit score will likely see an improvement in time.
This is another misconception that people have about debt consolidation plans. The main reason why people find it challenging to get a debt consolidation plan in Singapore is that they try to sift through all the loan providers and make applications one by one. However, you can actually make the process simpler by working with a loan comparison site like Lendela.
In Singapore, not all debts can be rolled under a debt consolidation plan. You can only consolidate unsecured loans. However, all secured debts, such as mortgages and car loans, cannot be included in the plan.
This is incorrect. When you pay multiple and high-interest debts using a debt consolidation plan, you do not immediately get out of debt. Although you get a more simplified method of paying, the debt is still there and will take some time to clear. Therefore, you can only be sure of being debt-free once the debt consolidation plan is cleared. It is important to put every focus into repaying the loan to get out of debt and improve your credit score.Back to top
Debt consolidation is a type of personal loan that combines multiple debts into one, so that you pay a single monthly payment with a lower interest rate.
Opting for a debt consolidation plan in Singapore can be an effective way to help you simplify your finances and eventually help you regain your financial freedom.
Before applying for a debt consolidation plan in Singapore, you should check that you meet the local requirements as well as thoroughly understand what a debt consolidation loan plan entails, including key concepts like loan tenure, amount payable, and loan interest rate.
Debt consolidation plans can bring a slew of benefits for individuals juggling with multiple loans, but to make the most out of your plan, be sure to follow the crucial do’s and don’ts.