Against the backdrop of the increasing credit card and unsecured debt, debt consolidation is emerging as a solution to manage loan obligations more effectively, creating a path towards financial recovery.
There are a number of ways to consolidate debts, including but not limited to balance transfers, personal loans, refinancing and home equity. This can generally be through banks or moneylenders. You can learn more about the different types of personal financing available with our comprehensive Lendingpot guide. Today, we want to delve a bit more into debt consolidation with moneylenders, exploring how it works, what it entails, what to look out for, and how you can go about consolidating your debts with the help of a moneylender. .
Multiple credit card bills and loans can be difficult to track and manage. Debt consolidation simplifies financial management by merging multiple debts, such as credit card balances and loans, into a single monthly payment. It can take several forms, such as through a personal loan, in which a new loan is used to pay smaller debts from other lenders. As a borrower, you can then focus on paying this single, new loan within the stipulated time rather than having multiple loans to juggle.
Another common debt consolidation plan is balance transfer credit cards or line of credit, the former popular because they often offer up to zero interest rates if you repay your outstanding bills within a limited period, usually 12 months or less. Having only one loan to track as well as the lower interest rates and more favourable lending terms can help reduce financial stress.
Read More: Personal Loans vs Balance Transfers: Which is Better?
As we discuss debt consolidation with moneylenders and how it works, several key questions come to mind. We shall answer these common questions here so that you can gain a better understanding of how debt consolidation works with moneylenders.
Moneylenders are often SMEs without a complex hierarchy, and are therefore at greater liberty and flexibility to make decisions regarding your personal loan terms and conditions. With this in mind, it is easier for you to negotiate loan terms that are favourable to your current situation, and repayment capabilities. You will be able to settle on an interest rate and tenor so that repayments fall within your means, and are not burdensome.
Borrowers have to either be Singaporean citizens or PRs. Moneylenders also lend to foreigners, but you must have a valid work permit, S Pass or E Pass. Borrowers are also required to have a minimum monthly income, which varies from one money lender to another. In general, minimum monthly incomes for borrowers fall between $1,200 to $2,000.
The important documents a moneylender requires relate to your identity, citizenship or foreigner status and income. They include, but are not limited to:
Debt consolidation for moneylenders works by combining multiple loans from different licensed moneylenders into a single loan. This is particularly beneficial if you have several high-interest loans from moneylenders, as it makes no sense to consolidate a lower-interest bank loan with a higher-interest moneylender loan. By consolidating only moneylender loans, you can streamline your debt into one manageable payment. Convenience is a key advantage: instead of juggling payments to multiple lenders with different due dates, consolidation allows you to focus on one payment schedule, reducing the risk of missing deadlines. Additionally, debt consolidation can extend your repayment tenor, combining short-term loans into a longer-term loan. This reduces the monthly repayment amount, making it easier to manage your cash flow.
However, consolidation comes with its costs. Moneylenders typically charge an upfront fee of 10% for each new loan, which can add to your financial burden. For this reason, debt consolidation should only be considered when absolutely necessary—such as when you're struggling to keep up with multiple payments or finding it difficult to manage various lenders. Evaluate your financial situation carefully and weigh the benefits of reduced monthly payments and increased convenience against the cost of consolidation. This ensures that consolidation is a financially sound decision for your circumstances.
Registered moneylenders generally allow loan applications to be done online at any time. Forms can be filled out easily with your Singpass account when you apply on Lendingpot. After application, the lender will take some time to process your form. They will then contact you to advise you regarding your application’s approval status.
Once approved, you will have to meet the lenders in person at their registered business premise to sign the loan agreement.. This serves the dual purpose for the lenders to verify your identity and for you to ensure that they are a legitimate business. Once the loan agreement has been signed, disbursement is carried out almost immediately or within 24 hours. It will be up to you to make the necessary arrangements to repay your outstanding loans with these funds. Repayments should commence immediately before the next repayment deadline.
Searching for suitable moneylenders that offer consolidation loans is a time consuming process. If you have outstanding debts and are looking for debt consolidation loans, consider Lendingpot.
Register with your Singpass Myinfo account and begin receiving loan offers from interested lenders. We partner with more than 50 lenders on our site, including registered legal Moneylenders in Singapore. Contact us if you have any questions about our convenient and free to use site, and we will be happy to assist you.
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