Do Licensed Money Lenders Offer Debt Consolidation Plans?
Is a debt consolidation plan available at every money lender? What is a debt consolidation plan and how does it work? Can I still borrow money if I have multiple existing debts? Do licensed money lenders offer debt consolidation plans?
If you find yourself wondering about such questions, you have come to the right place. In this article, we share things about debt consolidation plans that most people don’t know or are confused about. For starters, debt consolidation plans and debt consolidation loans aren’t entirely the same.
First announced by the Association of Banks in Singapore (ABS) in 2017, a debt consolidation plan is designed specifically to help Singaporeans and Permanent Residents who are struggling to pay off multiple unsecured debts better manage their debts.
This loan facility is designed to pay off all your eligible unsecured loans such as credit cards, personal loans, and credit lines, but not certain needs-based unsecured loans such as renovation loans, education loans, medical loans, and business loans.
Consolidating all your debts can make up a shocking amount —and give you a reality check right there and then— but the main benefit of a debt consolidation plan is that you only need to focus on making a single repayment every month. This makes it easier and more seamless for you to keep track of your repayments altogether. Plus, you will likely be chalking up less interest than if you were to continue letting high-interest debts such as those stemming from overdue credit card bills snowball indefinitely.
Anyone struggling with multiple credit card bills can tell you that it is no joke as the interest rates compound daily, fast and furious.
As of the time of writing, there are 14 participating banks and financial institutions that offer debt consolidation plans.
A debt consolidation plan from any of the 14 participating banks and financial institutions is only available to a Singaporean or Singapore permanent resident who fulfils the following criteria:
- Annual income of $20,000-$120,000
- Net Personal Assets of less than $2 million
- Total interest-bearing unsecured debt on credit facilities and credit cards from financial institutions in Singapore of more than 12 times one’s monthly income
Licensed money lenders do not offer debt consolidation plans, but a good majority of them do offer debt consolidation loans.
Think of a debt consolidation loan as a type of loan that you can take to settle your outstanding debts, but with easier eligibility requirements compared to a debt consolidation plan from a bank or a financial institution.
In the name of ensuring funds aren’t misused in any way, some debt consolidation loan licensed money lenders go the extra step: They insist on seeing their borrowers use the disbursed debt consolidation loans to pay off their creditors right in front of them.
Similar to banks and financial institutions that provide debt consolidation plans, licensed money lenders’ debt consolidation loans have varying interest rates, fees, and charges.
Make sure you do your research, compare, and find the best debt consolidation loan licensed money lender that can provide you with a loan that best meets your needs.
Take your time to compare your options before settling on one. It is only right that you make the most informed decision you can as much as possible!
What are the eligibility requirements to apply for a licensed money lender’s debt consolidation loan?
Generally, to be eligible for a debt consolidation loan, you will need to meet the following requirements:
- Have an annual income of at least $20,000
- Be fairly deep in interest-bearing unsecured debt
Bear in mind the application criteria for debt consolidation loans from licensed money lenders are not the same as debt consolidation plans from banks and financial institutions.
For instance, banks and financial institutions provide debt consolidation plans only to you if you have a total unsecured debt of more than 12 times your monthly income. This option may not be suitable for people who are in debt but not that deep in debt. Banks may also subject debt consolidation plan applicants to longer approval and waiting time.
If you are urgently looking for a debt consolidation plan, why not consider applying for a debt consolidation loan with a legal money lender in Singapore? For one, legal money lenders are less strict when it comes to extending loans to borrowers. Plus, the loan processing and approval time are usually fairly quick.
If you do meet the legal money lender’s requirements and are approved for a debt consolidation loan, be disciplined — use the debt consolidation loan wisely to pay off your existing debts, and remember to make punctual repayments for your debt consolidation loan to pay down your debt while avoiding late fees and late interest charges!
Strive to stay debt-free thereafter.
Staying out of debt is not an easy feat. It takes time and a whole lot of discipline.
At CompareSing, you can gain access to a wide network of the best and the most reliable licensed money lenders in Singapore. All you have to do is fill out the application form on our website and let us know the loan amount you’re looking at. Thereafter, sit back and wait for loan quotes to be sent to you.
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