The obligation of meeting the day to day financial needs is slowly becoming a tall order for many Singaporeans. The introduction of consolidation loans has come as a relief for many people, especially for small income earners. This makes it terrific for individuals having different loan debts with varying interest rates. Keeping track of all the loans can be a tedious exercise. As such, it is always better to have only one consolidated loan.
Here are the benefits of debt consolidation loans in Singapore.
1. Interest Rates
Compared to licensed private money lenders, traditional lenders offer loans at lower rates as they provide loans mostly to customers with excellent credit ratings. However, their rates are not stable, and they often change in a span of two to three years. Private lenders, on the other hand, have interest rates that are set by the government and hardly change.
2. Approval Process
If you are hit with an emergency and looking for a fast approval loan, a debt consolidation loan should suit you best. Upon application, you are likely to receive the money in 24 hours or less. Traditional lenders, on the other hand, can take up to one month to get your loan approved. One additional benefit is that not many supporting documents are required for you to qualify for the loan. All you need to do is build a good relationship with the lending institution.
3. Credit Check
Before giving out any loan, it is normal for every financial institution to check credit records for their customers. Compared to traditional moneylenders, debt consolidation loans are less strict. They have specific loan packages set aside for people with bad credit ratings. Depending on your credit rating, there should be a package set aside for you.
Almost all traditional lenders require security before giving out any loan. In the case of consolidation loans, no security is needed before a loan is issued. You do not have to worry about anyone seizing your assets if you fail to pay your loan. As such, you can always change the terms of payment to suit your needs. All you would have to do is express yourself on your most favourable terms.
Debt consolidation loans tend to offer more flexibility when compared to a traditional loan. Their terms and conditions are also not fixed. Every customer is given favourable terms and conditions that will enable them to pay their loans with ease. If at some point, you feel a given payment plan does not suit you, there is always room for change. Both parties, the lender and the loan recipient, can agree on a payment plan that suits both parties.
Many consolidation loans are provided by licensed private moneylenders. Therefore, they adhere to the law and to their industry’s code of ethics. The Ministry of Law ensures that all consolidated loan lenders in Singapore are transparent with their interest rates, eligibility requirements, fees, and charges. The loan amount depends largely on the total debt servicing ratio, but this is not to say that low-income earners are not able to qualify for the loan. The lenders should always ensure that they do not over-burden their customers with un-realistic loans.