What is Debt Consolidation and who is it for?

Debt consolidation is a process that allows you to combine all the different debts you owe under one easy-to-manage loan. This means you only have to make one consolidated monthly payment each month instead of paying several other lenders and creditors. Debt consolidation is ideal for people who are struggling to make their monthly payments on time, or for those who are struggling to pay off their debt due to little disposable income.

Debt consolidation loans in Singapore can go up to $50,000 and last up to 10 years. This means that you can use the loan for any purpose, including paying off credit cards, overdrafts, personal loans, hire purchase agreements, cash loans, or even medical expenses.

For example, let’s say you have a credit card with a $5,000 limit and you have a personal loan with a $15,000 limit. You can consolidate these debts into one loan with a $20,000 limit and then use the loan to pay off both debts and get rid of them.

How is Debt Consolidation different from other loans?

In Singapore, debt consolidation loans can be different from other personal loans in terms of the repayment term. While standard personal loans are usually taken out for between 3-5 years, debt consolidation loan terms can be anywhere from 2-10 years. This means that it’s possible to take out a debt consolidation loan for a shorter period, such as 2 or 5 years, to pay off multiple debts as quickly as possible. However, it’s also possible to take out an 8-year or longer debt consolidation loan if you want because of your financial situation. If your credit score is good enough, you might even be able to get an unsecured debt consolidation loan online without visiting the bank at all!

Debt Consolidation vs Debt Management Plans: What’s the difference?

Debt management plans are often referred to as DMPs. These are programs that are designed to manage your debt and help you get out of debt faster. While debt consolidation loans in Singapore can be used for similar purposes, there is a slight difference between the two.

The main difference between the two is that debt management plans run for a set period (usually 3-5 years), while debt consolidation loans can last anywhere from 2-10 years. However, both programs are designed to help people get out of debt faster and save money by paying off their debts entirely in a manageable way.

Debt Consolidation vs Personal Loan: What’s the difference?

Debt consolidation loans in Singapore can be different from personal loans because they carry a lower interest rate than standard personal loan rates. This means that you will pay less interest on your debt consolidation loan each month than other kinds of personal loans. You will also pay less interest because the loan is usually taken out for a more extended period than different personal loans (such as 3-10 years). Because you’re paying off your debt over such a long time, your monthly payments are spread over more months, which costs you less interest.

What factors affect your Debt Consolidation Loan Approval?

Your debt consolidation loan approval depends on several factors, including your gross monthly income, the amount of your monthly expenses, the number of debts you have, and your credit score. If you have a high credit rating, then it’s likely that you’ll quickly get a debt consolidation loan.

You can also get a debt consolidation loan if you’re not earning enough money to cover your expenses. In this case, the lender will consider how much you’re earning and then decide whether or not they think you’ll be able to make the monthly payments on time. If they feel that you won’t be able to pay back the loan on time, they might decline your application.

How does Debt Consolidation affect my credit score in Singapore?

As with all other types of loans, debt consolidation loans will affect your credit score. Your credit score is impacted by taking out a debt consolidation loan because you’re taking on additional debt. So your overall debt-to-income ratio will be higher than it was before. This means that if you take out a $20,000 debt consolidation loan, then your total outstanding debt will increase by $20,000, and this will affect your credit score accordingly. 

However, if you can afford to take out this kind of loan, it’s not likely to have too much impact on your overall rating since the maximum amount borrowed for these types of loans is usually $50,000 (at most).

If you’re looking for a Debt Consolidation loan, then you can apply for one with Synergy Credit!