Debt Consolidation Loan: How It Helps Singaporeans Get Out of Debt
Posted: Aug 23, 2017
Singaporeans are struggling with debt. From 2006-2016, credit card rollover balances have more than doubled. Debt comes in many forms. There are previous loan installments, bills, payments and obligations that can pile up and end up becoming debt. That’s why more and more Singaporeans are looking for better debt management plans. The best way to get out of the vicious cycle of debt is by taking a single debt consolidation loan at lower interest rate.
You would think why take another loan when I am already stuck in vicious debt cycle? Debt consolidation is the process of taking a new single loan from a licensed moneylender at lower interest rate to pay off all your existing loans or debts. The goal of taking a debt consolidation loan in Singapore is to lower the interest rate while paying off your debt more quickly.
Essentially, by taking a debt consolidation loan you are replacing many loans with one, at an improved interest rate and monthly payment amount. However, there are two types of debt consolidation loan. Assess your financial situation before taking the decision to go for any of these two loans.
- Secured Debt Consolidation Loan: Secured debt consolidation loan is guaranteed by an asset. The asset is generally equal to or greater than the debt itself. You can ask the moneylender to provide you loan against any asset such as car, equity, gold, life insurance policy, etc. The penalty for defaulting in this loan would be simple: your asset will be taken. The only advantage of taking secured consolidation is that you will have to pay a lesser rate of interest.
- Unsecured Debt Consolidation Loan: This loan type is a good option if you don’t want to put your assets at risk. Many moneylenders offer unsecured debt consolidation loan with lesser rate of interest than secured loans. This type of loan does not involve any collateral. This is why the risk behind unsecured loan for debt consolidation is much greater than that of a secured debt.
Are you considering Debt Consolidation?
If you are considering debt consolidation, then contact a trustworthy and licensed moneylender in Singapore. A moneylender will assess your complete financial situation, your current debt burden, and other expenses to suggest debt consolidation plan suitable for you.
The most important thing to remember about a debt consolidation loan is that it doesn’t change the debt amount you owe. It just helps you pay off your existing debts with a new loan, taken at a lower interest rate and monthly installments. It also helps you to improve your credit score by making timely payments.
Go ahead if you believe debt consolidation loan can help you in your present financial situation.
Joanne Poh is an owner of renowned and transparent moneylender firm in Singapore. He owns a blog and writes a lot about new Singapore an money lender terms, policies, and plans to ensure that readers stay aware of current money-lending trends.