Combine All Loans Into One: How Does Debt Consolidation Loan Work?

Living in Singapore can be challenging at times with high expenses and bills to pay for. Some of you might be struggling with debt, or have taken on multiple loans to pay off different debts. With different payment deadlines to manage, dealing with numerous loans can be stressful, especially if you can’t repay on time and chalk up late payment fees.

One potential solution is to combine all loans into one through a debt consolidation loan.

What is a debt consolidation loan?

A debt consolidation loan allows borrowers to combine all loans into one loan as a way to refinance their debts across various financial institutions.

A debt consolidation plan is only available for unsecured loans, like credit cards and personal loans, that don’t require any collateral. Once all your loans are combined, you only have to concentrate on paying off a single debt consolidation loan with one financial institution. You no longer need to take note of multiple repayment deadlines. Debt consolidation loans also generally have better repayment terms, such as lower interest rates.

Where can you get a debt consolidation loan?

Debt consolidation plans are available at participating financial institutions in Singapore, including banks like DBS, HSBC, Citibank, and more.

Debt consolidation loans, on the other hand, are available only at major licensed moneylenders.

Who is eligible for a debt consolidation loan?

Depending on which lending institution you approach for a debt consolidation loan, there may be slightly different eligibility criteria.

Eligibility criteria with banks

• Banks only offer this scheme to Singapore Citizens or Permanent Residents.
• Borrowers are expected to earn an income between $20,000 and $120,000 per annum.
• Their total assets, excluding liabilities, should be less than $2 million.
• Their total loans, including interest from all partnered financial institutions in Singapore, should exceed 12 times their monthly income.

Eligibility criteria with licensed moneylenders

• A debt consolidation loan eligibility from licensed moneylenders may differ based on the amount and type of debt you have. Generally, moneylenders offer loans to individuals who are at least 18 years old and residing in Singapore (i.e. Citizens, Permanent Residents, or foreigners with a valid work pass).
• Borrowers are expected to have a steady monthly income to support their loan repayment.
• The amount you can borrow depends on your monthly income and total debt sum.

Why should you go for a debt consolidation loan if you have multiple loans?

1. Lower interest rate

A debt consolidation loan is known for having lower interest rates than the average personal loan. Always compare the rates and loan terms of different lending institutions before making your decision.

2. Get out of debt quicker

Debt consolidation loans can really save you extra cash in the long run, especially if you refrain from extending your loan tenure and are diligent in paying off your loan on time. The extra cash you save up can be used to pay off your debt consolidation loan, which can expedite your repayment so you can clear your debt more quickly.

3. One repayment deadline with one lender

When you combine all loans into one, you streamline your debts to make your life a lot less stressful. A consolidated loan is much easier to manage compared to multiple loans. You only have one set of loan repayment dates to remember.

Do you need a debt consolidation loan?

If you are struggling to juggle multiple loans and debts (e.g. multiple payday loans), you can apply for a debt consolidation loan with us to lessen your financial load. At Prosper Credit, we’re a reliable and legalised loan company in Singapore that offers customised loans which are catered to each individual’s needs.

Apply with us now and get a debt consolidation loan with ease.

About the Author

Shona Menon

Shona is an illustrious storyteller that uses the powerful magic of words to help businesses and brands convince (not coerce) their audience.