When Should You Get a Debt Consolidation Loan in Singapore?

Debt is a reality of modern living. Did you require a consistent monetary influx that you reimbursed after a couple of paydays? Did your ambitions outpace your monetary possibilities? Did you want to invest in the well-being of your family and purchase goods and services that contributed to their personal and professional development? If that’s the case, you’ve probably taken out multiple loans.

From credit card debt to personal or payday loans, financial credits have become synonymous with life in the big cities, and at the moment, no less than four out of ten SG citizens pay off some kind of loan.

However, with time, the financial packages you administer could become too much to handle. Are the interest rates of your contracted loans no longer favorable for your situation? Have you reached a situation where you can no longer fulfill your financial debts? Do you want to streamline your debt and reduce the burden on your family’s finances? If that’s the case, one solution to consider is utilizing a debt consolidation loan in Singapore.

DCLs are flexible financial instruments that you can use to margin your existing loans in a singular monthly payment. Moreover, this monthly payment will usually come bundled with a lower interest rate and a repayment period that is suitable for your situation. The key word when talking about DCLs is security. These financial packages have fixed repayment terms and are not affected by market conditions. Besides, they can help improve your credit score, eliminate the risks of economic defaults, and be a tool to reduce your everyday stress.

How Will It Work?

A secure debt consolidation loan in Singapore is a flexible financial instrument that both private lenders and traditional banks can grant. It aims to cover your existing debt and replace it with a new loan with different terms. How it works is like this: The lender you contact will offer a sum to cover your existing debts, including any potential penalties, which must then be repaid according to fixed terms.

The repayment structure in a debt consolidation loan is usually significantly more advantageous than in the case of the already existing debt, and the same is true for the interest rate.

Let’s say, for example, that you have a credit card debt of $22,000, which has an APR of 22%. Plus, let’s assume you still have to pay $10,000 on an initial personal loan of $20,000 with an APR of 12%. Your total remaining debt will, therefore, be $32,000. However, if you plan to pay off this debt in three years, then the total you will have to pay will be $41,000. Now, let’s say you get approved for a DCL of $32,000 with an APR of 8%. If you want to pay off your existing debt in three years, then the total will amount to $36,000. The DCL will help you save $5000 and significantly simplify your financial management.

What Other Loans Can You Get?

Singapore is the most developed city-state in the world. Yet, at the same time, it is one of, if not the most expensive metropolis in Asia. Need a cash infusion to help you realize your ambitious goals? If that’s the case, an excellent idea is to utilize the financial packages offered by private lenders. What types of financial instruments can you access? For one thing, you should look at personal loans, which can be used for a variety of purposes and feature flexible repayment terms and attractive interest rates.

Do you need quick cash that will get you to the end of the month? Are you facing an unplanned expense, or do you want to make an emergency purchase? If so, you could apply for a payday loan. These financial instruments are not suitable for long-term lending, as they feature higher interest rates than in the case of personal loans. However, since they usually involve small amounts that must be repaid at the next paycheck, payday loans can be a good instrument for short-term expenses.

Do you want to renovate your dwelling and potentially flip it for a profit? In that case, you might be interested in a renovation loan. Likewise, you could obtain an education loan or a business one, suitable to push your venture to the next level. The financial services offered by private lenders are more varied than those offered by traditional banks, and at the same time, the process of applying for them is more straightforward.

What Are the Protections Offered to Borrowers?

In Singapore, the activity of private lenders is regulated by the MAS, while the CBS provides the credit score reports of the borrowers. Plus, in accordance with the Moneylender Act of 2008, which has undergone constant changes over the years, the maximum interest rate that moneylenders can charge is 4% per month, regardless of income or loan type.

In addition, in accordance with the regulations imposed by the Ministry of Law, as of October 1st, 2015, lenders cannot charge more than $60 for each month of the loan late repayment and impose a credit administration fee higher than 10% of the credit total.

Since November 1st, 2011, licensed private lenders are only allowed to advertise their services through business or consumer listings in digital or traditional print media, on websites that belong to them, and through printed ads placed on the exterior facade of the headquarters. Have you received promotional messages via email or SMS about the services of a private lender? Then, he might be functioning illegally or not following the regulations imposed by the MAS.

Moreover, the Ministry of Law presents provisions regarding the maximum amounts that can be lent by money lenders for unsecured loans. Are you an SG national? Then, if your annual income is over $20,000, you could borrow six times your monthly salary. Do you earn less than $10,000? In that case, the maximum amount you can obtain is $3,000, or $500 if you are a foreigner with an SG residence.

An All-Encompassing Answer for Intricate Financial Circumstances

DCLs are flexible financial instruments that you can use to streamline your existing loans into a single monthly payment. Moreover, this monthly payment will usually come bundled with a lower interest rate and a due date that is appropriate for your situation.

The key word when talking about DCLs is security. These financial packages have fixed repayment terms and are not affected by market conditions. Besides, they can help improve your credit score, eliminate the risks of economic defaults, and be a tool to reduce your everyday stress.

A debt consolidation loan can be a way to simplify your finances, make order in your monetary plans, save up on cash, and invest in other revenue streams that can contribute to your family’s economic stability. In addition, if you suspect foul play, you will be protected by the Singaporean government. Do you think the contract terms of the loan are abusive?

Then, you can contact the CPD divisions of the Ministry of Law or write directly to the Registry of Moneylenders. However, SG is a safe country when it comes to financial practices, and the activity of private lenders is, in almost all cases, carried out honestly and transparently.