Debt is a severe and aggravating issue, which can cause stress to a person. When one has a lot of debt, they may not know how they will cope with it. To repay debt, you need to have a well-structured plan so that you can alleviate our stress and be assured that you will be able to pay them off.
When you have several unsecured debts, their interest can add up quickly, further aggravating your problem with on-time payments. But what if you had a solution to your issues? Since debt seems to be a common problem plaguing many, there are several solutions to this issue. While some are not as useful as others, they can still help individuals plan their debt repayment.
What is Debt Consolidation?
When you compare personal loans in Singapore, and credit card debts, you will see that the amount quickly adds up. Having multiple debts are means that you have to keep track of multiple payments in a month. This can seriously hamper your ability to budget, and sometimes a single payment may even slip your mind, which can cause significant issues.
Therefore, a debt consolidation plan can be a boon for those who have multiple debts and wish to slowly pay them off. With debt consolidation, you can merge all of your debt into a single plan so that you only have to worry about a single monthly payment, rather than multiple ones. This financial strategy is often used to cope with multiple debts.
Why is Debt Consolidation Useful?
When you are for debt consolidation money lenders will help you ensure that your debt is merged into one. Hence, this ensures that you do not have to worry about multiple payments and do not have to keep up with multiple payment dates with varying amounts. With a single payment, you are able to pay off your debt little by little.
Additionally, with debt consolidation, you can pay off your debt faster. When you have multiple debts, the interest can add up quickly. When you compare personal loans in Singapore to other loans or have multiple loans, it is easy to see that the interest rates for personal loans are much lower than others. Hence, when you consolidate your debt, you will have a lower rate of interest.
This lower rate of interest means that when you are paying off your debt every month, you are actually making a substantial dent in the capital of your debt, rather than simply paying off the interest every month. Hence, a debt that would have taken you years to pay off can be paid off in a couple of months or significantly less.
Hence, many people opt for debt consolidation money lender who is registered to the Registry of Money Lenders in Singapore, can provide. This financial strategy helps ease stress and ensures that a person is able to pay off their debt. When you opt for debt consolidation, you can also plan your budget. When you have a single monthly payment of a fixed amount, it is easy to track how much you will be spending every month and budget your expenses accordingly. Hence, this strategy helps keep your finances in check.
These are the chief reasons why people opt for debt consolidation. However, there are several reasons apart from these which make this strategy the best fit for many.
When can you opt for Debt Consolidation?
How do you know whether you should opt for debt consolidation or not? There certain instances where you may not be able to opt for debt consolidation. Debt Consolidation plans help people who have an outstanding balance of more than twelve times their monthly salary. Hence, before you decide you want to opt for this strategy, ensure that you calculate the total monthly payment that you need to make. Then, compare the amount to your monthly salary and figure out if it is twelve times or more than your salary. If the amount is lesser, you may benefit from personal loan installments or a balance transfer.
You can opt for debt consolidation for unsecured loans. However, some unsecured loans, such as education loans, renovation loans, etc., are not eligible. If you have credit card debt or personal loan debt, then you can opt for this strategy. However, in other cases, you need to be sure that your loan qualifies for debt consolidation.
Are you eligible for Debt Consolidation?
Debt consolidation plans were started for permanent residents of Singapore and citizens so that those with high-interest unsecured loans can opt for a financial plan where they can repay their debt. However, you need to meet certain criteria to qualify for Debt Consolidation.
In order to qualify for Debt Consolidation, you need to:
- Should be a citizen of Singapore or a Permanent Resident
- Should be a salaried employee with an annual income between $30,000 to $120,000
- Should have unsecured interest-bearing debt which amounts to more than twelve times their salary.
- You can only have one active debt consolidation plan active at any given time. After three months, you are qualified to switch your debt consolidation plan to a different bank, which may lower interest.
When you have an active Debit Consolidation plan, you cannot apply for credit cards or personal loans unless the total balance remaining is less than eight times your salary. Hence, this allows you to focus on your debt, and stay away from the vicious cycle of taking out debts and falling prey to their burden.
Debt is a significant burden that can take a toll on your health, physically as well as mentally. Hence, when you seem to be burdened by debt, you need to look into proper financial strategies to help pay off your debt. Proper planning is necessary so that you can pay off your debt securely and on time.