on Sep 25, 2020
No one likes to service multiple debts, particularly high-interest ones. Sadly, people do fall into such circumstances, such as racking up credit card bills and emergencies, or encountering unexpected health issues or retrenchment, making existing loans harder to service. Many end up stuck in cycles of repaying exorbitant interest rates, depleting their finances and quality of life. Here’s how to avoid that outcome with the help of a debt consolidation loan in Singapore.
What Is A Debt Consolidation Loan?
Simply put, a debt consolidation loan is a single loan that combines multiple loans into a single loan, offering a fixed interest rate, fixed tenure, and automatic payment every month. Imagine it as taking a new loan with a financial entity, such as a licensed moneylender, and having the moneylender consolidate the various payments on your behalf. Licensed moneylenders in Singapore are capped at a max of 4% interest per month, making it a much more optimal option to service debts that charge far higher rates, or when banks do not approve your loan due to poorer credit rating.
Debt consolidation loans in Singapore offer a range of other benefits, such as maintaining your credit rating and increased flexibility. Defaulting on previous debts can negatively impact one’s credit score, making it harder to borrow in the future. By taking this loan, it reflects the ability of the lender to pay punctually and in full, making it easier to get approval for future loans. The increased flexibility of a single payment per month also allows the lender to utilise their funds more efficiently, helping them improve their quality of life and repay the loan earlier.
A debt consolidation loan does not reduce the principal you owe for your existing debts. Rather, it extends the tenure of your loan repayment with a much more serviceable interest rate and regular monthly payment. Licensed moneylenders will also come up with a long-term plan for you to service the loan, taking in your financial circumstances and needs.
How Do I Know If I Need It?
Thirdly, it is perfect for those who are fatigued from the stress of managing multiple loans’ monthly repayments and calculating finances. A debt consolidation loan takes the burden of coordination off your shoulders, giving you a better peace of mind and allowing you to have more time and energy to improve your finances.
Interested to learn more? Visit R2D Credit today for swiftly approved and affordable interest loans in Singapore.