What do you do when you have taken multiple loans and find it difficult to keep track of all of them? The answer can be found in a simple solution: taking a single debt consolidation loan.
Debt consolidation is one of the easiest and most effective procedures that effectively merges all your loans into one. This means you don’t have to track your different loan types, interest rates, and due dates. A debt consolidation loan is a hassle-free option that allows you to do as its name suggests – consolidating all your loans into a single loan and paying them off in one go.
Besides its hassle-free nature, debt consolidation loans can also bring with them favourable terms, such as lower interest rates and flexible tenure, allowing borrowers to better manage their monthly expenses. When borrowers make one payment instead of multiple payments, they’re often allowed to enjoy several benefits due to the higher quantum figure – from lower interest rates to the less visible risk of collateral repossession.
If you want to know more about taking a debt consolidation loan, read the following guide to know more.
What is a Debt Consolidation Loan?
Simply put, a debt consolidation loan is a more flexible payment option that allows a borrower to get rid of the burden of paying off multiple loans individually. As a result, this may help borrowers to improve their credit scores – which financial institutions use to determine whether or not they are willing to lend to you and at what rate. In addition, this may also have the benefit of helping borrowers to reach their long-term financial goals as long as they are disciplined about sticking to their repayment cycles.
Eight Reasons Why You Should Take a Debt Consolidation Loan in Singapore
1. Helps to Keep Track of All Your Debts
It’s time to say “Bye Bye” to high-cost debts! A debt consolidation loan doesn’t just help a borrower to better keep track of their debts as there is now only one loan to worry about, it also means the borrower can better manage all their monthly EMIs without the help of friends and family. There is no longer the need to keep records of the terms and conditions of multiple loans. Generally, a consolidated loan also means lower interest rates, which will allow you to become a more responsible borrower who can make repayments on time.
2. Turn Multiple Payments into One
The repayment process is simplified and one is no longer bound to make the repayment without affecting your monthly expenses. If you find yourself struggling due to high-cost debts, multiple EMIs, and high-interest rates, debt consolidation might be the solution you seek. After all, it is much easier to focus on one debt as opposed to juggling multiple repayment deadlines.
3. Low Risk of Collateral Repossession
Often when you offer an asset as collateral, you are eligible for a lower interest rate. This is great if you are regular in your EMIs. However, if you’re irregular in making payments, you’ll not only find yourself stuck with a poor credit score, but also run the risk of losing the asset that you used as collateral. By making it easier to service your debts, a debt consolidation lowers the risk of you losing that precious asset.
4. Improve Credit Score
By combining multiple loans into a single one, you can see a major improvement in your credit score in just a few months, simply because you are less likely to miss a payment. The higher your credit score, the easier it will be for you to get a good loan in the future.
5. Provide a Regular Fixed Payment Amount
Debt consolidation is considered a cost-effective method as it allows you to easily manage all your debts. You will worry less about your finances because you can now better manage with the same or fixed EMI every month. Gone are the days when your bills shock you.
Fret not over having to keep track of multiple loans. Debt consolidation loans will save you time, effort, and energy because you only need to make one payment. Usually, unsecured loans come with a high-interest rate.
7. Improve Overall Lifestyle
The overall aim of a debt consolidation loan is to allow you to handle the repayment of multiple loans more flexibly. This inevitably means you will worry less about paying off multiple high-cost debts and lower your stress levels.
8. Flexible Loan Tenure
Another benefit of owning a debt consolidation loan is that it offers flexible payment durations or tenure. It allows you to choose a loan tenure to secure and reach more manageable monthly repayments. There are several factors taken into consideration–such as income, credit score, and the loan amount–to come up with a sensible payback plan. The loan tenure of debt consolidation usually ranges between one and ten years. Taking a short-term loan in Singapore often means higher interest rates. The longer your loan duration, the lower your monthly EMIs. That said, longer tenures also mean paying more in the long run so make sure to do your sums before taking any loan.
If you find yourself dealing with different debts and loans, a debt consolidation loan is a possible solution for you. Understanding the advantages of debt consolidation loans can empower you–as you now know how to raise your credit score and overcome the inconvenience of multiple loans. Many borrowers pick this strategy to improve their financial well-being.
One of the best places to get a debt consolidation loan is from Cash Direct, a licensed moneylender based in Jurong East. Talk to us to discuss your requirements. Our friendly service staff will help you find the best solution for your needs.