Do you find yourself juggling various loans from a variety of lenders while also attempting to deal with the strain of making monthly payments? It’s possible that now is the right time for you to start thinking about a debt consolidation loan in Singapore as the best way to solve your problem.
For individuals with a credit score that falls somewhere in the middle, the question of how to get a loan to consolidate debt may be on your mind. The basics of debt consolidation loans and how they differ from debt consolidation programs will be covered in detail throughout this article. You will also learn how to maximise the benefits of a debt consolidation loan and how to qualify for one, even if you just have a decent credit rating. In addition, we will put you on the appropriate path in order for you to find loans of this kind.
What Is A Debt Consolidation Loan
A personal loan for debt consolidation is a type of loan that can help simplify your financial situation by consolidating all of your existing loans into a single loan that is then aggregated into one payment. Due to the streamlined nature of this technique, you will only be responsible for one monthly instalment.
When compared to the interest rates that you were previously paying, the interest rates on debt consolidation loans are often lower, which is one of the most significant advantages of these loans. Your financial load will be eased, and the increased manageability of your monthly payments will be a direct result of the drop in interest rates.
When searching for this kind of loan, it is essential to keep in mind that it should not be mistaken for a debt consolidation plan, as these two financial solutions are quite distinct from one another in a number of crucial aspects.
5 Advantages That Come With Using A Debt Consolidation Loan
When approaching a lender for a loan, it is crucial to have a distinct goal in mind for the money that will be borrowed. One can put a loan to use in a variety of contexts in Singapore, including the following examples:
Personal Loans
Managing many personal loans at the same time can be difficult, especially when it comes to making payments on time. Nevertheless, if you take out a loan to consolidate your debts, you might make your financial commitments far more manageable. This one loan can include several different kinds of personal loans, such as payday loans, bridging loans, and urgent loans, all rolled into one convenient package.
Credit Card Loans
Accumulating many credit card loans sometimes results in expensive interest rates. Consolidating your credit card debt will help you avoid these high-interest rates. You can reclaim control of your financial situation by transferring your credit card bills into a single, more manageable instalment loan. This strategy gives you the ability to customise your repayment plan based on your financial capability, making it easier to manage and more likely to be successful in the long run.
Joint Accounts
Have you and a partner or friend jointly borrowed a loan, and they’re struggling to meet their repayment obligations? You don’t have to shoulder the burden of monthly instalments or face late payment fines. Instead, you have the option to merge the joint account debt into a single loan with a more favourable interest rate.
Student Loans
In Singapore, taking out loans to support your education is common. However, securing immediate employment after completing your studies can be uncertain, which may pose challenges when it comes to repaying student loans. To simplify your student loan repayments, you can obtain a loan from a lender designed for consolidating your debts.
Renovation Loans
Home renovation projects are typically one-time endeavours. Often, individuals may acquire multiple renovation loans from different lenders to finance these projects. Rather than dealing with the complexities of managing several monthly instalments, which can be demanding, you have the opportunity to consolidate these loans into a single, more manageable repayment arrangement.
How Someone With A Fair Credit Score Can Obtain A Debt Consolidation Loan
Your ability to obtain a loan is directly related to your credit score, and this is especially true when working with a financial institution. Your history of making on-time loan payments will determine whether you have a good, fair, or poor credit rating.
The following advice can help you obtain a loan for consolidating debt even if you have fair credit:
Borrow Small Loans
Obtaining a sizeable loan in Singapore while maintaining a satisfactory credit history might, in all honesty, be a challenge. On the other hand, there are ways to get access to loans with more manageable and lower amounts.
These more manageable loans can be secured and repaid in a timely manner, providing you with the opportunity to gradually improve your credit score. After you have built up a positive credit history, you will be in a stronger position to approach a lender about obtaining a larger loan, particularly one that is tailored for the purpose of consolidating previous debts.
Restructure Your Debts
It is essential to understand that having many unsecured loans at the same time might have a negative impact on your credit rating. You can take proactive steps to improve your creditworthiness and increase your chances of being approved for a debt consolidation loan by restructuring your existing loans.
For instance, you might want to think about contacting your creditors to explore possible solutions, such as extending the amount of time you have to make payments or negotiating for a reduced interest rate. You will be able to make considerable advances toward boosting your credit score if you take these actions and ensure that you make regular repayments on some of your bills. As a result, you will be in a better position to take advantage of better lending options.
Approach A Licensed Money Lender
When you ask for a loan, many moneylenders who are licensed to do business in your state might not check your credit report. These lenders could be a reasonable choice to examine if you find yourself struggling with fair credit and are trying to consolidate your debts. If this describes your situation, read on.
Borrow From A Credit Union
When opposed to conventional financial institutions, credit unions in Singapore are known for being less profit-driven and more adaptable. As a consequence of this, financial institutions are frequently ready to disregard a good credit rating in order to provide financial assistance to people who are in need.
You have the advantage of being able to compare the many debt consolidation loan options offered by the several credit unions that are currently operating in Singapore. This gives you the ability to evaluate several aspects of the loan, including the interest rates, the loan amounts, and the repayment plans, so that you may discover the most appropriate package for your current financial condition.
Pros And Cons
Here are the benefits and drawbacks of using debt consolidation loans:
Pros:
- Simplified Repayment: Debt consolidation loans provide a more manageable alternative, allowing you to organise and streamline your repayment plan.
- Lower Interest Rates: Typically, debt consolidation loans offer lower interest rates compared to the combined interest rates of your existing loans.
- Enhanced Payment Tracking: With a single loan, you can more easily keep track of repayment dates, reducing the chances of missing payments.
- Improved Credit Score: Consistently making timely payments on your debt consolidation loan can contribute positively to your credit score, enhancing your financial standing.
Cons:
- Late Payment Penalties: Similar to other loans, missing your monthly payments on a debt consolidation loan can result in late payment fines and higher interest rates.
Where And How To Apply
When seeking loans to consolidate your debts in Singapore, you have several options for lenders to consider:
- Banks: Banks in Singapore offer various debt consolidation loan packages. It’s advisable to carefully assess the available options to identify the most suitable lender for your needs. Keep in mind that banks often have strict eligibility criteria for loan applicants.
- Licensed Money Lenders: Licensed money lenders provide an alternative for individuals who may not meet the stringent requirements set by banks. Dealing with a licensed money lender offers a level of security, as they are regulated by the Ministry of Law in Singapore.
Applying for a Loan:
The loan application process is relatively straightforward if you have the necessary documents in order. Here are the typical requirements for an application:
For Singaporeans or Permanent Residents:
- Proof of identity
- Proof of income
For Foreigners:
- Proof of residence
- Work permit or Singpass
- Bank statements or payslips
To apply for a loan, you can use the online application process using your Singpass. Simply visit the official website of your chosen lender, locate the application page, and complete the required details while attaching the necessary documents. This streamlined process facilitates a convenient application experience.
Locating a Debt Consolidation Loan That Will Accept Someone With Fair Credit In Singapore
Managing multiple debts from various lenders can prove to be a challenging task, especially when it involves keeping track of monthly instalments.
A solution to consider is obtaining a debt consolidation loan, which allows you to amalgamate your renovation, student, and credit card loans into a single, more manageable loan.
If your credit score is fair, you might be wondering how to secure a debt consolidation loan. In such cases, licensed money lenders or credit unions can be viable options. Additionally, you have the opportunity to work on improving your credit score to achieve a more favourable rating.
For those seeking the expertise of financial professionals to assist in consolidating their debts into a single loan, MoneyIQ is here to help. We are recognised as one of the leading licensed money lenders in Singapore, offering reasonable loan terms and conditions. To streamline the process, you can conveniently apply for a loan through our official website.
