Whether you’re starting a new business or need funding to pursue higher studies, a loan can help materialize your dreams. But many need financial backing in more than one situation, so they end up taking multiple loans.
Eventually, this leads to a cash drain, burning a hole in your pocket. But a debt consolidation loan in Singapore can help you deal with this financial burden caused by repaying multiple loans.
So, what is a debt consolidation loan?
The process of combining several loans into a new one is called debt consolidation. Instead of repaying many smaller loans, a debt consolidation loan in Singapore allows you to obtain a fresh loan that can help you repay your existing liabilities. Debt consolidation proves to be of great benefit, especially when you are paying a high-interest rate on your loans. It helps to reduce your monthly EMI payment.
Traditional lenders v/s legal money lenders
Any traditional or unconventional finance institution in Singapore can provide a debt consolidation loan.
Although you can obtain a debt consolidation loan from traditional institutions, like banks, these organizations are more focused on bigger businesses or individuals with good credit scores. The application assessment process also takes a long time in such organizations.
Moreover, there’s an insistence on face-to-face meetings before loan approvals. All of this can be time-consuming and inconvenient.
So, it has become a popular practice to approach a legal money lender, all thanks to the consideration and convenience they offer to their clients.
As opposed to the traditional banks, legal money lenders offer a fast and easy approval process. Even the application process is online and hence, quite convenient. You can apply from the comfort of your home at any time.
However, as required by the law in Singapore, final approval of your loan happens only after your identity and documents are verified in person. So, although convenience is highly valued, security is not compromised by these legal money lenders.
Benefits of consolidating your debts
Some crucial factors set a legal money lender apart from a traditional banking institution when it comes to debt consolidation loans.
1. Fixed and affordable rate of interest:
A legal money lender in Singapore is allowed to charge a maximum of a 4 percent rate of interest per month. So they consolidate all your different loans with varied interest rates into one single loan amount, and a fixed interest rate, which is also affordable.
2. Fixed tenure:
A debt consolidation loan in Singapore makes it possible to extend the tenure to repay your loan without changing your principal amount. So, while the principal amount you owe remains the same, you get more duration to repay that amount. A legal money lender takes into consideration your financial situation and comes up with an appropriate long-term repayment plan based on your needs.
3. Monthly automatic payments:
The repayment process is automatic and regular, leaving little to no scope for defaulting on your EMI. All your payments get done in a timely manner and set a good record for your future. When you go to a legal money lender, they give importance to ease of the process.
All these factors make loan repayment easier and flexible. At the same time, a debt consolidation loan in Singapore indirectly helps you maintain a good credit score for yourself. You can repay your loans in full and with punctuality – both of which are essential qualities for improving your credit score.
Who should apply for debt consolidation?
In case you are already juggling with multiple loan repayments, or are planning to take additional loans, you could consider a consolidation process. Further, if you think your credit rating can be an issue, then a legal money lender can be a good option for you.
Various financial institutions can have their own eligibility criterion with minor differences. So make sure you go through it and see where you fit. Eligibility checkers can make it simpler for you.
Taking the plunge
A debt consolidation loan in Singapore is a great alternative to managing multiple debts. It takes the crazy coordination off your task list and streamlines your financial plan so that you can borrow without any worries and repay without any hassle.