If you know someone who’s struggling with managing their credit card debt and personal loans, you might want to share with them about debt consolidation loans in Singapore. But if you’re unfamiliar with this loan and how it works, then you’re in the right place.
As the name suggests, a debt consolidation loan/plan (DCP) is a repayment scheme that combines all your outstanding unsecured debt into one big loan with a licensed moneylender or financial institution (FI) of your choice.
In short, this means that all your debts will be combined into a single, larger piece of debt to be paid off. You can use this as a tool to deal with credit card debt, personal loans, and other unsecured credit.
How It Works
Obtaining an approved DCP eases your financial burden by managing your loans. To illustrate, the licensed moneylender pays off all your outstanding debts and closes all your unsecured accounts. After, you can focus on repaying the consolidated debt through a repayment plan that is of a lower interest rate which also saves you the trouble of distributing money to various creditors.
Take some time to research and calculate how much you will end up owing to the FI or licensed moneylender, and how much you’ll have to pay per month. Keep in mind that taking up this loan does not erase the amount of your original debt.
How It Benefits You
This loan is suitable for those who have multiple debts with high-interest rates or monthly payments that cost a fortune. Through obtaining a DCP, you can focus on a single monthly payment rather than juggling numerous payments.
Moreover, the process is much more fuss-free and convenient as you only have one point of contact when fulfilling your payments on top of dealing with lesser paperwork. You’re also saving a significant amount of money, as this loan is usually with more favourable payoff terms like a lower interest rate.
As you repay your debt with an end goal in mind, you’re also working towards becoming debt-free.
Frequently Asked Questions (FAQs)
1. Where can I apply for a debt consolidation loan/plan (DCP)?
Currently, DCPs are offered by 14 FIs in Singapore. Various moneylenders provide this service as well, and this is how Easyloan.com.sg can help! By creating an account with us, you’ll get access to useful resources including a directory of different money lending companies! With that, you can weigh the terms and conditions before submitting your application to the one with the best conditions suited to your financial situation.
For a list of licensed moneylenders, refer to the link below:
2. What if I don’t qualify for a DCP?
That’s a good thing because it most probably means that your outstanding debt has not reached your 12 months’ salary. Nevertheless, if you’re worried about your snowballing debt, feel free to contact us where we’ll guide you on the steps needed to acquire a personal loan.
3. Out of the total amount, can I do a partial consolidation instead?
No, as DCP can only be done in full with one FI or licensed moneylender so that you may focus on paying down your total outstanding amounts with a single FI or licensed moneylender.
4. What are the basic eligibility requirements?
To be eligible for a debt consolidation loan, you must:
a. be a Singaporean Citizen or Permanent Resident (PR); and
b. earn between S$30,000 and S$120,000, with Net Personal Assets* less than S$2 million; and
c. have total interest-bearing unsecured debt on all credit cards and unsecured credit facilities that exceeds 12 times of your monthly income.
*Net Personal Assets: total value of your assets (such as properties and shares) excluding liabilities (mortgage, unpaid taxes, etc.) that cannot exceed S$2 million.
5. What are the basic documents needed to apply?
- Copy of NRIC (front and back)
- Latest 3 months of original payslip
- Original PUB bill or handphone bill that states your residential address
- ACRA for self-owned business (if any)
- Taxi Vocational License (for taxi drivers only)