Credit Consolidation stands to the process of taking another loan to repay off the existing consumer debts and liabilities. In this process, multiple loans are clubbed into a single debt, mixing all the short and more negligible amounts. With the consolidation, your credit rating is not affected, and you can pay many loans with one big loan. In this blog, let’s learn about credit consolidation Singapore.
What is Credit consolidation?
Credit consolidation and debt consolidation are the same terms, leading to the same features and descriptions. The reason behind its consideration is that this offers more favorable terms for payoff, which says lower monthly payments, low-interest rate, and many other features. It is used as a valuable tool to deal with your credit card debts, existing liabilities, student loans, and others.
Credit consolidation is basically of two types, including Secured and Unsecured. There are some considerations for credit consolidations that need to be kept in mind for clarity.
How Do credit consolidations work?
It is already known that credit consolidation is a process to merge different liabilities under a single head, making them easy to repay. Besides, it is the helpful way for people burdened with multiple loans. They can apply for debt consolidation, combining multiple debts and paying just a single amount at the month’s end. In Credit consolidation Singapore, the consumer needs to take a new loan and pay the new debt until all the dues are settled.
You can search for your banks, credit card companies, or credit unions for the same if you have excellent and favorable terms with them. There are several private mortgage companies as well promoting the same. Few creditors might also show interest in your work and would sort out the process for you.
The companies associated with credit consolidation states that if you pay for your credit cards or loans at higher interest rates, it might save your money and will allow paying off your debts quickly. Besides, if you work with the right partner, it will work effectively. It would be best if you considered a debt management plan as it is a highly effective strategy.
Hence, the credit consolidation process will help you combine all your unsecured payments into the single monthly payment. It will help you avoid struggling with multiple due dates and amounts.
Types of Credit Consolidation
Do you want to learn about Credit consolidation Singapore? The debt consolidation loans are of two types, including Unsecured and Secured. As the name itself clears out, secured loans are based on collateral, be it any property or car. The asset provided to the creditor will act as collateral until the amount is repaid.
On the other hand, unsecured loans are not processed based on any asset and comparatively difficult to approve. They are likely to have increased interest rates and are provided only for lower amounts than secured loans. But in both cases, interest rates are usually lower than those offered in credit cards or are either fixed, which cannot be varied based on the repayment period. We have mentioned a few common ways to consolidate your loans into a single payment.
Credit Cards
If you have multiple credit cards and if you’re tired of their repayment and missed due dates, then you must try out this method. Under this, you can club all your dues for the existing cards into a new card. The new will though charges lesser and the plus point is you can club your existing credit card promotional offer, if any, with the new for continued benefits. It would help if you remembered that these companies would initially offer lower interest rates to attract customers but increase within a few days or months. You need to keep a check and read out all the terms and conditions thoroughly.
HELOC
Home Equity Lines of Credit (HELOC) can also be clubbed with Credit consolidation Singapore. It would be best if you were very specific for its repayment as your house is at stake in this home equity loan.
Student loan Programs
Although private loans are excluded from this offer, it applies on the ones offered by the federal government. Therefore, the new composite interest rate is the weighted average of all loans.
Advantages of Credit Consolidation
The only significant advantage of the method is a combined loan for all the existing ones, lowered interest rates. Also, the payer will be liable only for a single debt. It will also decrease their repaying amount per month.
Points to remember before going for Credit Consolidation
Revise Your Spending
It would be best if you analyzed or find out the reason behind your debts. If you are spending more than your earnings, you need to revise your bank statement and go accordingly because debt consolidation won’t help. Besides, you must increase your income or reduce your expenditures.
Also, you need to fix a budget and check if you can pay off the existing debts by adjusting your spending. It would be best if you also pitched some creditors for debt or credit consolidation, as they might offer lower interest rates along with some other additional benefits too.
Top Rated Credit consolidation Singapore Banks
As this article serves the Singaporeans’ interest mainly, a list of banks mentioned below is rated for the best debt consolidation plans.
- HSBC
- Maybank
- CIMB
- POSB
- Standard Chartered
- OCBC
- UOB
These banks mentioned above are rated the best for providing lower interest rates and have been ranked on the top in Singapore for their best services.
Conclusion
Credit consolidation Singapore will allow your monthly payments to reduce to the affordable amount. It will make your monthly payment more diminutive than the total amount of your consolidated loans. Besides, it makes your loan arranged swiftly, reducing your monthly payments to get getting your finances back under your control quickly.
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