Asian woman in Singapore contemplating how to consolidate her three credit card loans

What is debt consolidation? Learn how banks and private money lenders in Singapore reduce our debt obligations.

4 min

‘I want to be debt-free’ is a common phrase used by many individuals seeking financial freedom. Fortunately, there is no secret to this notion. The objective is attained solely by paying off our debts and loans accordingly. Yes, this may sound overwhelming to some of you, especially today, when credit cards and unsecured loans have emerged to play a rather significant role in the lives of most working adults. Nonetheless, responsible borrowing and proper payment habits can indeed allow us to be debt-free.

However, some of us may have had some impulsive urges to splurge in the past and now we might think it is too late to seek financial advice or help cause there’s no way out $3,000 monthly paycheck can clear an existing $30,000 loan, right? Wrong! To be debt-free, it’s important to know and understand not just our existing liabilities, but also the options available to reduce our financial burden monthly. That brings us to the topic of debt consolidation. This was introduced to consolidate all our unsecured credit liabilities and obligations into one debt to aid us in achieving the desired outcome of being debt-free. The most common of debt consolidation in Singapore are banks and licensed private money lenders.

It’s highly recommended that we understand the way debt, loans, and interest rates work. This is because, whenever we use a credit facility from banks or from reliable money lenders in Singapore, and procrastinate on payments, we will be charged a late fee along with an interest rate which may be compounding daily. Hence it’s important to look at all our credit facilities and make a mental note of the interest rates. Most of the time, we will be observing an interest of 26%-29% per annum on the outstanding balances. Also, if we have existing personal loans, balance transfers, or even spent too much on our credit cards, we should seek to pay the lowest interest rates on these balances to sustain the payment schedule and also to not ‘lose’ out too much by paying a ton of interest fees.

For a debt consolidation plan, we can approach banks or even licensed and reliable money lenders in Singapore to apply. It is important to seek assistance before the situation spirals completely out of control. We can approach a debt consolidation professional to seek the necessary clarifications and submit an application. It is important to take note that to firstly be qualified, there are certain prerequisites to meet. Also, once we apply for debt consolidation in Singapore, we cannot apply for additional credit until we have fully paid off what we owe currently. The financial institution that approves our debt consolidation will assist us by clearing all our existing obligations to other financial institutions and provide us with a lowered interest rate to make monthly payments so that we save on the total interest payable to our debts. In addition, the tenure for debt consolidation may go up to even 7 years with some financial institutions, which further suggests that we can tailor the monthly payments to comfortable levels to avoid any defaults in the future.

Dealing with debt is never going to be easy due to the physical and mental toll it may take on most of us. For our benefit, it’s important that we closely monitor our finances and also seek awareness of the options available. There are many instances where individuals end up paying almost twice as much as they should have, only because they did not seek help at the right time. Credit cards, loans, and other forms of credit should all be considered ‘debt’ which, if not dealt with carefully, may cause devastating effects on an individual’s personal and professional life. Whenever in doubt if you can be qualified for debt consolidation in Singapore, the best approach is to speak to the professional within that industry, and even if debt consolidation may not be the right solution, they will be able to guide us on all the other options available. Every day of delay causes interest rates to compound and eventually, the payments become significantly more than what we had spent.

Timely and effective solutions are always the best way to deal with debt. Just like how cancer is to cells, debt should be seen as a progressive problem eating at our finances. The only way to deal with it is to tackle it with effective solutions such as the debt consolidation plan. Whenever unsure if we should consider it, remember to seek the necessary advice. Borrowers should not avoid their private money lenders but instead, look to work hand in hand to derive solutions for any financial backlash that comes about at any given time. That way, we will realise that all monetary problems do have solutions and it’s never too early or late to start the quest towards debt-free living.

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