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Four easy steps to a debt consolidation loan in Singapore:
1. Apply with Lendela for a debt consolidation loan in Singapore
2. Receive offers from multiple banks
3. Compare offers and select online
4. Sign the agreement 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.
Go ahead and immerse yourself in the subject of debt consolidation with our simple guide below. If you still have any questions about debt consolidation loan in Singapore or the subjects around it, please reach out to us and let us help you.
When you have balances on several credit cards, paying them off can be a long and taxing process. It could seem hard to make progress with the payments, especially if you have multiple bills from various banks.
Wouldn’t it be convenient if you could combine all the loans and pay one each month?
Debt consolidation in Singapore 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 to effectively combine different loans together and turn it into one. It should minimise the monthly payment by lowering the interest rate, and thereby making it easier to pay. This is referred to as “consolidating” the loan.
Most of us take up loans in life to be able to buy or invest in things like cars, home renovation, vacations or education. If you have engaged with various loans and gathered credit card debts with varying amounts and various interest rates, chances are that they cost you much more than what's necessary and therefore become one of the quickest routes to insolvency. A personal loan can be your ultimate lifeline here as it helps to lower and stabilise the debt.
When applying for a debt consolidation loan in Singapore, you are taking out a new personal loan to repay, or cancel out, the current unsecured debts. It usually involves pooling together all existing debts and summing them into a single debt with more convenient terms such as lower interest rates. Individuals can leverage debt consolidation as a means of cushioning the burden of credit card or student loan debt, for instance.
An example: An individual has multiple loans and is forced to make payments of S$1,000/month for the total loan debt. Apart from the actual loan costs, there might be various additional fees for each loan, that has to be paid monthly. Through an online application at Lendela, a bank or financial institution that offers a debt consolidation loan can offer to manage these deals for the individual. The bank then reduces the monthly payment rate of the borrower by asking him or her to repay i.e. S$650/month for an extended time at a slightly increased interest rate. The debt consolidation not only results in a lower monthly cost and liberation from unnecessary high interest rates for the borrower. It also makes the life easier for the borrower, now only having to think about one loan, single loan terms and one single fee.
If you're qualified for a personal loan and manage to consolidate all of your debts, you will be able to enjoy the following benefits:
1. Single payment
No more headache battling numerous invoices and their separate deadlines or fees, when you only make one payment each month. This will allow you to stay alert and pay off the debt quicker than usual. No more missing statements and contemplating which loans to pay first – just focus on one bill.
2. Reduced stress
Consolidating your loans into one account will allow you to focus on other parts of your life. As we all know, debt is one of the usual factors that lead to stress. Constantly worrying about your debt can be counterproductive!
3. Decreased interest rate
Generally, credit cards has the highest interest rates compared to other loans in the market. Another advantage of consolidating your debt with personal loans is that it allows you to get a lower interest rate, and indirectly saves money on each monthly instalment.
4. Improved credit score
If you’re paying your loan consistently, you will improve your credit score. Having multiple accounts and making late payments significantly hurts your credit score. If you consolidate your debt into one account, and keep paying it on schedule, you will be able to rebuild your credit.
It is easy with Lendela! When filling out our fast online application which gets sent to several banks and financial institutions at the same time, you have the option to select debt consolidation as the purpose of your loan application. The banks and financial institutions receiving your application will then look at different debt consolidation loan solutions for you, get back with their respective offer, and you just select the option that suits your economy the best.
When consolidating loans, you need to get the total amount from all your debts and the resulting balance would be the amount of your new overall debt. The loan you’ll be taking will be used to pay the debt. This is why it is important that you add as many of your current outstanding loans or credits as possible in your application. This will make your debt consolidation journey much easier and faster further down the line!
An unsecured debt or unsecured loan in Singapore is often referred to as a loan that is not asset-backed. The debts could come from medical and utility bills, bank cards, and other kinds of credits given without a security required. For banks, debts of this kind are usually of higher risk, since the bank may have to enforce legal means in order to get the money back in cases where the borrower is unable to pay up.
These debts, be they private or business related, can be burdensome to the borrowers, due to the large interest rates attached as a result of the high risk they constitute to the banks. An unsecured debt can be cleared out by a borrower by claiming bankruptcy, but employing this option reduces the chances of getting a future loan.
When unsecured debt isn't payed back
Banks initially contact their clients when there is an inability to repay a debt, after which other measures are employed when a repayment compromise cannot be reached. Taking the matter up with credit-reporting firms, transfer the debt to collection agencies, and prosecuting the borrower, are other alternatives banks can explore. A borrower may thus be forced to repay the unsecured loan using necessary assets, in the event of a court order.
Debt collection is the process of going after payments of debts that borrowers owe. For this, there are collection agencies that serve as collectors or representatives of the banks by collecting debts for a fee or a percentage of the full amount to be repaid (all about legal debt collector in Singapore). The first contact from a collection agency is usually in the form of a notification, giving the borrower a chance to pay the debt. Legal action is taken only as a last resort but before this procedure commences, it is important to find out if you as a borrower can negotiate payment in instalments.
Debt collection generally includes these steps:
The law does not provide any guidelines as how to handle late payment and as such, it should be discussed as part of the loan in the first place to be valid. In addition, collection costs must be ratified and documented when the contract is negotiated. Although, they can sometimes be paid by the collector upon the request of the court.
Debt recovery methods
The pursuance of borrowers can be time-consuming, duteous and expensive, especially from overseas creditors from other business climes. Here are some of the methods of debt recovery:
As mentioned above, one or many credit cards are a very common reason for debt. A personal loan for debt consolidation in Singapore and servicing credit card debt is beneficial due to the low interest rates associated with it. Low interest rates can help you to reduce the time taken to make repayments to the outstanding loan value, by tapering the full interest rate. Doing so enables you to service credit cards in more precise terms with a fixed, final date in view.