At times, debt may occur; especially in situations where you might need money to either finance your education or new house. Whatever the reason may be, how you choose to manage, it is all that matters.
The interest rates that come along with some of your debts can make it hard to manage. Here is where a debt consolidation loan Singapore comes in handy. This is a strategy that covers your debt in a single payment and offers you several benefits. For example, besides giving your credit score a much-needed boost, the interest rates are also much lower than you would have paid on a month-to-month basis.
Keep reading on for some of the benefits that come with debt consolidation and find out how you can make full use of them.
Lower interest rates
It goes without saying that most unsecured debts have interest rates that are high; a good example being credit cards. This has a significant impact on the amount you are required to pay each month. However, if you have a good credit score, you can quickly lower the interest rates by paying off the accounts with high-interest rates by rolling them into one account.
As such, the reason why a debt consolidation loan is important – it will ensure you pay less interest on your new account and give a better credit score; a major role in knowing how much interest rate you can expect to receive. Additionally, your credit score is also a key factor in deciding whether you can receive instant loan approval in Singapore.
Turn multiple payments into a single payment
Consolidating your debts makes paying them simpler. This is because the more extended period provided for directly affects the due monthly payments. If you have multiple credit cards, consolidating everything into one will ease your financial worries as you’re able to focus on one debt source instead of struggle to meet multiple deadlines.
As said before, consolidating your debt into one account will help reduce financial stress because you don’t need to stress yourself trying to meet multiple deadlines. This enables you to take control of your finances because you only have to pay one account monthly. You can, therefore, very easily find yourself better placed financially and away from the financial burden.
Can improve your credit score
Credit score is what will determine your interest rates. Hence, debt consolidation loans come in handy as it will give your credit score a significant boost, which will financially impact you positively as your credit utilisation rate will reduce. This rate is derived by the amount you owe divided by your credit limit, which then plays an essential role in calculating your credit score.
However, seeing a temporary drop in your credit score after acquiring a new credit card should not alarm you since it is very normal and only short term. The long-term benefits on your savings on interest and credit score make it worth the short-term drop.
Pay it off faster
Credit card balances take years to clear. Fortunately, licensed money lenders take into consideration factors like your income, how much you owe, and your credit score. With this, you can easily come up with a comfortable repayment plan. For this reason, you can pay off your loan much faster any without any added stress on you.
Applying for a debt consolidation loan comes with various benefits – from improving your credit score to easing financial stress. Ensure you have engaged with the right moneylender to clear your existing debts easily.