What Is A Money Lender Debt Consolidation Plan?
If you’re struggling with money lenders and bank debts in Singapore, you’re not alone.
In fact, many people in Singapore have the same issue. But there is hope. There is a way to consolidate your money lender debt and get back on track.
With a money lender debt consolidation plan, you can work with a professional to create a customised repayment plan that fits your budget.
This way, you can make one monthly payment to the money lender, and it will pay your individual banks and money lenders on your behalf.
If you’re ready to get out of debt and take control of your finances, this debt consolidation plan money lender guide may be the right solution for you.
What Is A Debt Consolidation Plan?
A debt consolidation plan (DCP) assists in the consolidation of all outstanding unsecured loans.
This includes credit cards and some types of unsecured loans. These are combined into a single loan with a financial institution, such as a licensed money lender or bank.
However, secured loans such as those for education, real estate, and automobiles cannot be consolidated under the DCP.
Under the DCP, commercial loans cannot be consolidated either.
In essence, this means you will only make one loan repayment each month to one financial institution rather than numerous loan repayments to various banks, financial institutions, or licensed money lenders.
You will be able to manage your repayments more easily as a result.
What A Debt Consolidation Plan Can Be Used For
If you want to manage your multiple installments easily, you might want to consider a debt consolidation plan money lender.
This can be a helpful way to lower your monthly payments and simplify your finances.
But what exactly is a debt consolidation plan used for?
A debt consolidation plan is basically a new loan that pays off your existing debts.
However, it is important to note that debt consolidation plans in Singapore are only used for unsecured credit facilities. These include credit lines, personal loans, and credit card loans – and not secured loans.
The common use of a DCP is to consolidate high-interest credit card debts into a single loan with a lower interest rate. This can save you money on interest charges and help you get out of debt faster.
Another use for debt consolidation loans in Singapore is to consolidate student, personal, and credit loans into one loan with a single installment and at a lower interest rate.
This can also help you pay less interest and get you out of debt more quickly.
Lastly, debt consolidation can provide some relief from the stress and anxiety that come with having multiple debts.
Dealing with multiple creditors can be difficult and time-consuming, so what you can do is to choose a debt consolidation plan money lender.
What A DCP Excludes
A debt consolidation plan doesn’t take care of outstanding secured loans such as car loans and housing loans.
It will also exclude the following unsecured loan accounts:
- Business-related credit facilities
- Loans granted under joint accounts
- Education loans
- Medical loans
- Renovation loans
Who Can Apply For A DCP?
Singaporeans and permanent residents who are trying to manage multiple high-interest debts but are struggling to make the required payments can get help from a debt consolidation plan.
You must have debt greater than 12 times your monthly salary to qualify for a debt consolidation loan.
When you apply for a consolidation loan, the bank gives you money equal to the total amount of the outstanding debt.
This sum reflects all applicable fees and expenses that have accumulated because of the debts.
If you are a Singaporean or permanent resident, you will need the following documents to apply for a debt consolidation plan:
- Most recent credit report from a bureau showing your credit score
- A copy of your NRIC
- Last three months’ income tax returns
- Most recent unsecured loan and credit card statements
- A listing of your unsecured credit card balances that have not yet been billed, as well as your payment schedule
If you are a foreigner, you are required to produce the following additional documents:
- Valid work permit
- Proof of residence (e.g. utility bills, tenancy agreement)
- Payslips/salary/bank account statement
Another requirement for debt consolidation plan eligibility that you should be aware of is the fact that you can only have one active debt consolidation plan at any given time.
You will not be able to apply for a new loan or credit card after enrolling in a debt consolidation plan – until your outstanding debts have been reduced to manageable levels.
Most banks require that your debt be reduced to no more than eight times your monthly salary.
How A DCP Works
The DCP is designed to assist you in consolidating loans from various financial institutions into one plan for simpler repayment and lower interest rates.
For instance, if you have several loans with two different financial institutions, you can consolidate debts into a single loan.
In this way, you will only have to make one low-interest repayment each month.
The bank may approve a debt consolidation plan that is less than the requested debt consolidation amount.
Hence, you will be required to pay the remaining balance directly to the lender from your own pocket.
A further 5% over the total debt consolidation amount will also be included in your initial debt consolidation plan.
The extra money is used to cover any fees you might have accumulated before the loans are paid off.
The 5% allowance cannot be deposited into your checking account. It must be paid directly to the lender from which you borrowed the loan.
Where To Apply For A DCP?
You can apply for a debt consolidation plan from any of the financial institutions listed below, regardless of whether you are a customer or not.
- American Express International, Inc.
- Bank of China Limited Singapore
- CIMB Bank Berhad
- Citibank Singapore Limited
- DBS Bank Ltd
- Diners Club Singapore Pte Ltd
- HL Bank
- HSBC Bank (Singapore) Limited
- Standard Chartered Bank (Singapore) Limited
- Maybank Singapore Limited
- Oversea-Chinese Banking Corporation Limited
- RHB Bank Berhad
- United Overseas Bank Limited
- Industrial and Commercial Bank of China
Each bank will have different interest rates and terms, so make sure you do your own research.
The bank you select will review your debt consolidation plan application, including the necessary documents, and if you qualify, you will be asked to sign the agreement.
It is important to read the loan agreement carefully and plan how to adhere to all the rules.
If there is something that is not clear, ask your questions before signing the agreement.
Alternatives To A DCP
It can be difficult to obtain a debt consolidation plan from banks as they have strict requirements.
However, if you are rejected by a bank, reputable money lenders in Singapore can assist you with a debt repayment strategy.
You can opt for a debt consolidation plan money lender such as BST Credit.
Be sure to only choose a licensed money lender that is on the Ministry of Law’s list of licensed money lenders.
The most popular strategy is to get personal loans for consolidating debt from a legalised money lender.
The borrower uses the loan to settle all outstanding debts before making a single monthly payment to pay back the consolidation loan.
When it comes to a debt consolidation loan, private money lenders are renowned for their quick approval processes and less stringent eligibility requirements.
They can approve your loan in a matter of minutes. Their online application form makes it simpler to apply for a loan.
It’s advisable that you only borrow from a registered and licensed lender if you want to enjoy the full benefits of debt consolidation.
Here are the benefits of using a licensed money lender:
- Low interest rates
- Flexible monthly repayments
- Choice of loan tenure
- Easy online application
- Minimal requirements
- Fast approval
Disadvantages of Debt Consolidation
Even though a DCP is a good way of reducing your financial stress, there may be serious consequences if it is not properly utilised. In some cases:
- It could take longer for you to pay off your debt.
- You may run the risk of accruing more debt if you don’t follow through with your payoff plan.
- You may end up developing poor spending habits.
What To Consider Before Applying For A DCP
If you’re considering applying for a DCP, there are a few things you should keep in mind.
Firstly, make sure you understand how the plan works and what the requirements are.
Some banks will be more stringent than money lenders in terms of the documents required and use of credit scoring reports.
You’ll also want to consider whether you can afford the monthly payments and if you’re comfortable with the terms of the loan.
If the consolidated plan offers you a cumulative repayment amount that is similar to what you are paying now, then it may not relieve you of your current debt burden.
So before you apply for a DCP, take the time to compare offers from different lenders. Be sure to read the fine print so that you know what you are agreeing to.
And remember, even if a DCP can help you get out of debt, it’s not a magic solution. You’ll still need to be diligent about budgeting and working towards paying off your debt in full.
A Debt Consolidation Plan Can Be A Viable Option
A debt consolidation loan is a type of personal loan in which all of your existing loans are combined into a single loan.
So instead of paying multiple installments, each with interest, and on different dates, you will make a single monthly payment.
The main benefit of debt consolidation is that it enables you to organise your budget better.
This is because the post-consolidation interest is much lower than the aggregated interest rates of all your previous loans.
If you’re considering a debt consolidation plan money lender, talk to your lender about what your options are.
While banks offer this debt management plan, their processes are usually tedious, long, and demanding.
Fortunately, Singapore authorised money lenders also offer this loan facility and the approval time is similar to that of personal loans.
Are you finding it difficult to meet your monthly loan obligations on time? Are your installments taking a toll on your budget?
BST Credit is a licensed money lender that will assist you in restructuring your loan repayment schedule into manageable installments.