What Is A Money Lender Debt Consolidation Plan?
Are you struggling to keep up with your monthly payments?
If you’re feeling overwhelmed by the amount of debt you have, a money lender debt consolidation plan might be the solution for you.
From one single monthly payment, a debt consolidation plan (DCP) can help you pay off your debts and get back on track financially.
In this article, we’ll take a look at how a debt consolidation plan money lender can help you. We will also tell you what to consider before applying for a debt consolidation plan.
What Is A Debt Consolidation Plan?
A debt consolidation plan is a form of debt relief where you take out a new loan to pay off your existing debts.
Basically, with a debt consolidation plan, you combine all your ongoing unsecured loans into a single loan.
By consolidating debt, you’ll only have to make one monthly payment instead of multiple payments to different creditors on different dates.
The aggregated interest rates can be very easy to track, handle and pay off, making it one of the most convenient options for borrowers.
How Does It Work?
When your personal loans and credit card bills pile up to a stage where it becomes many times higher than your salary, then consolidating debt is the best option for you.
To consolidate debt loans, you’ll first need to find a money lender that is willing to give you a debt consolidation loan based on the state of your finances.
Next, you’ll need to provide some information about your debts, including the outstanding balances and interest rates.
The debt consolidation plan money lender will then use this information to calculate how much money you’ll need to borrow in order to pay off all your debts.
After you’ve taken out the right debt consolidation loans Singapore money lenders offer, you’ll use the money to pay off your existing debt obligations.
Once that’s done, you’ll only have to make one monthly payment to the debt consolidation plan money lender, instead of making multiple payments to different creditors.
What Can A Debt Consolidation Plan Be Used For?
Debt consolidation plans Singapore lenders provide can be used for a variety of purposes including:
Credit Card Debts
When you have multiple credit card debts with different interest rates, it can be difficult to keep track of everything and make all the payments on time.
With a debt consolidation plan, you can consolidate all your credit card debts into one loan with a single monthly payment.
This will help you save money on interest charges and late fees, and get out of debt faster.
Unsecured personal loans can be expensive, especially if you have multiple loans with different interest rates.
By consolidating your personal loans into one loan with a reasonable interest rate, you can get out of your financial obligations more easily – in a faster and steadier way.
Accumulated Payday Loans
When payday loans accumulate for a long period of time, they can become taxing on you.
With an effective debt consolidation plan, you can get rid of all your payday loans and make one monthly payment instead.
What Does A Debt Consolidation Plan Exclude?
While debt consolidation is useful for quite a number of reasons, a debt consolidation plan money lender may have some exclusions.
Debt consolidation loans are primarily for unsecured loans. Thus, they exclude secured loans such as car loans or housing loans.
Here are the few types of unsecured loan accounts that are excluded from a DCP:
- Joint account loans
- Renovation loans
- Medical loans
- Credit facilities for business operations
- Education loans
Who Can Apply For A DCP?
The debt consolidation plans that money lenders of Singapore offer are available only for those who fulfil the following criteria:
- Must be a Singaporean or a permanent resident (PR)
- Must have an annual income ranging from $20,000 to $120,000
- Net personal assets should be below $2 million
- Must be heavily indebted – that is, the interest-bearing outstanding debts for unsecured credit facilities received from Singapore facilities must be above 12 times the monthly income.
If you meet the requirements, you can apply for a debt consolidation plan that money lenders in Singapore offer by providing them with these important documents:
- Copy of your NRIC
- Credit Bureau Report, or your credit history report
- Latest credit statements for all credit cards and unsecured credit loans
- Latest income documents
- Confirmation bills indicating the unbilled principal balance for accepted installment loans (if any)
What To Consider Before Applying For A Debt Consolidation Loan
There are a few things you should be clear about before applying for debt consolidation loans from money lenders in Singapore.
This way, you know what you are signing up for and won’t have to contend with any surprises.
Consolidating Debt Refinancing With A Second Financial Institution
There may be times when you have taken a debt consolidation plan from one financial institution for a certain period and are not satisfied with its terms of repayment.
In such cases, you can choose to refinance your debt consolidation plan with another financial institution that offers more flexible repayment schemes.
When you do so, you need to get consent or approval from the first financial institution where you have signed up for a DCP.
You may also need to pay early termination fees or penalties.
Insufficient DCP Amount
When you apply for a DCP, it is not always a given that you will get the debt consolidation amount that you require to pay off all the debt loans you have.
There are times when debt consolidation plan money lenders may offer you an insufficient DCP amount depending on your income range and financial situation.
This can make it difficult for you to clear your debts.
Suspension Of All Consolidated Unsecured Credit Facilities
Once you activate your debt consolidation plan, all unsecured credit lines that have been consolidated will be suspended.
This means you will not have access to any of these facilities until the debt consolidation plan period is over.
Also, you may not be allowed to apply for new credit cards or loans.
However, the debt consolidation plan money lender will give you options to get a revolving credit facility that can help you handle your essential payments.
Additional Charges In Your DCP Amount
The total amount calculated for your DCP will incorporate an additional percentage of the total.
This additional charge will act as a buffer for the debt consolidation plan money lender to cover any legal and consultancy fees that might be incurred during the debt consolidation process.
There may be cases when the loans for consolidating debt may have some last-minute charges to be paid such as late payment fees, penalties, etc.
Alternatives To The DCP From Banks
Applying with traditional financial institutions such as banks may not always guarantee the approval of your debt consolidation plans.
Also, banks have a complex debt consolidation process that may not be suitable for everyone.
In such cases, you have nothing to worry about as there are some debt consolidation plan money lenders in Singapore that you can approach as an alternative to banks.
These money lenders offer debt consolidation loans with more flexible terms and repayment schemes.
You can also get a higher loan amount from these money lenders as compared to banks.
With an online application process, easier eligibility requirements, and faster approvals, these debt consolidation plan money lenders are a great option when you need debt consolidation loans.
Benefits Of Debt Consolidation Loans From Licensed Money Lenders
As mentioned, a debt consolidation plan money lender can be a good alternative to banks.
However, it is important to choose trustworthy lenders that are legally licensed.
When you go with lenders that are not registered with the Registry of Moneylenders, it might affect your finances negatively.
Some of the benefits that you can enjoy by taking debt consolidation loans from private licensed debt consolidation plan money lenders are:
- Quick approval process
- Easier eligibility requirements
- More flexible repayment schemes depending on your debts
- Higher loan amount
- Affordable interest rates
It is important that you stay away from illegal debt consolidation plan money lenders that might put you in more debt, or even worse, land you in legal trouble.
Hence, a reliable licensed debt consolidation plan money lender should always be your first choice.
Getting crushed by the accumulating debts from multiple credit loans?
Free yourself from the trouble of endless loan repayment deadlines and a heavy financial burden with a more organised debt consolidation plan from Horison Credit.
We are one of the most trusted licensed money lenders in Singapore.