How To Get A Debt Consolidation Loan With Fair Credit In Singapore
March 23, 2023
Having many unsecured debts can be depressing and challenging. Often, the interest rates hike, outstanding debts never reduce, and you no longer keep up with prompt payment. Debt consolidation loans in Singapore can be your easy way out, even if you have a fair credit score. With a consolidated debt loan, you’ll pay your loan at lower interest rates with fixed monthly payments without sweating. This article will explore tips and resources on how to get a debt consolidation loan with fair credit in Singapore.
What Is A Debt Consolidation Loan?
A debt consolidation loan combines all your outstanding unsecured debts from various financial institutions or lenders so you can pay them as one on lower interest rates and fixed monthly installments.
Under the plan, the bank amasses your unsecured loans, such as credit cards and personal loans, as a single loan. You must make fixed monthly payments to your consolidation loan issuer over a flexible loan tenure towards the outstanding debts.
5 Uses Of A Debt Consolidation Loan
Consolidated debt loans are meant to clear many unsecured debts at low-interest rates. Such unsecured debts include:
- Bank overdrafts
- Credit card bills
- Medical bills
- Store bills
- Unsecured personal loans
How To Get A Debt Consolidation Loan With Fair Credit
Tips on how to get a debt consolidation loan with fair credit:
- Shop around: It’s important to compare different lenders and the terms they offer to find the best deal for you. Consider factors such as the interest rate, fees, and repayment terms.
- Consider a secured loan: If you have collateral, such as a car or home equity, you may qualify for a secured loan with more favorable terms.
- Improve your credit score: If you have time before taking out a loan, consider improving your credit score. This may include paying off debt, making on-time payments, and reducing your credit card balances.
Check If You Are Eligible
Getting a debt consolidation loan is simple, and the waiting period depends on your consolidation loan provider. However, before you get a debt consolidation loan in Singapore, you must meet these requirements to be eligible.
- You must be a Singaporean or a permanent resident of Singapore. If you are a foreigner, you must have an active work permit.
- You must be able to access your financial situation to determine whether you have the necessary funds to cover the monthly repayments.
Choose Your Preferred Bank Or Money Lender
While some banks may turn down applicants with poor credit ratings, other financial institutions and licensed lenders like Credit Thirty3 can loan people with bad or fair credit ratings. That’s why checking with several banks that offer debt consolidation loans is essential to see if you fit.
Before settling for any bank or licensed lender, understand each lender’s terms and conditions of service, compare interest rates and fees, and settle for one with the best low rates and minimal charges to make your repayments easier and more affordable.
Gather Your Documents
After choosing your ideal consolidated debt loan financial institution or lender, collect the documents stated by the lender. Some of the necessary documents you need to have before applying for the loan include the following:
For Singaporeans and Permanent Residents:
- A copy of your NRIC or passport
- Documentation showing your income, such as your Central Provident Fund (CPF) statement or bank statements
- A valid Work Permit, S Pass, or E Pass
- Proof of your current residence in Singapore, such as utility bills, phone bills, or a tenancy agreement
- Payslips or bank statements demonstrating your income.
Apply for your consolidated debt loan with the lender or bank you choose, either online or physically, and wait for the approval.
Debt Consolidation Loan Vs DCP
If you’re considering a debt consolidation loan with fair credit in Singapore to manage your debts, you may also consider a debt consolidation plan (DCP). A DCP is a repayment plan that allows you to combine all your unsecured credit facilities, such as credit cards and certain types of unsecured loans, from different financial institutions into one account with a participating financial institution. Unlike a debt consolidation loan, a DCP is not a loan. It’s a repayment plan that is negotiated with your creditors.
Pros And Cons
Debt consolidation loans and DCPs both have pros and cons to consider:
Pros Of Debt Consolidation Loans
- May have a lower interest rate than your original debts.
- Simplifies debt management
- It could improve your credit score. After applying for a debt consolidation loan, your details will be updated in your credit bureau report. If you promptly pay your loan, your credit rating increases, building your reputation again.
Cons Of Debt Consolidation Loans
- You may only qualify if you have good credit.
- It may have fees and closing costs.
- Could potentially put your collateral at risk if you default on the loan
Pros Of DCP
- It may be available to those with poor credit
- It can help you avoid default and bankruptcy
- Can potentially lower your interest rates
Cons Of DCP
- May have fees
- It may not be available for all types of debts
- May course your credit score to have a negative impact in the short-term
Where And How To Apply
Various financial institutions and licensed money lenders provide debt consolidation plans in Singapore. Here is a list of the banks you can consider when getting a consolidated debt loan.
- Maybank Singapore Limited
- Industrial and Commercial Bank of China Limited
- United Overseas Bank Limited
- Bank of China Limited Singapore
- Oversea-Chinese Banking Corporation Limited
- Citibank Singapore Limited
- DBS Bank Ltd
- CIMB Bank Berhad
- HL Bank
- HSBC Bank (Singapore) Limited
- Standard Chartered Bank (Singapore) Limited
- RHB Bank Berhad
- Diners Club Singapore Pte Ltd
- American Express International, Inc.
While money lenders also provide debt consolidation loans, settle for one licensed by the Ministry of Law in Singapore. Credit Thirty3 is an example of a legal money lender you can consider for a debt consolidation loan.
Here’s how you apply for a debt consolidation plan in Singapore.
- Submit your application to your bank or legal money lender online. Some of the details you need include your full name, contact, monthly income, and loan amount.
- Gather the required documents depending on your bank or lender, and submit them online.
- Get your loan approved.
- If your loan is approved, you’ll sign an agreement with your lender, and the approved debt consolidation loan will be disbursed to your account or creditors.
- You will start making monthly payments towards the consolidated debt loan, depending on the terms of service.
Get Your Debt Consolidation Loan Today
Consolidated debt loans could be your savior amid many unsecured debts. You’ll only need to pay the loan promptly. Apply now or contact licensed money lender Credit Thirty3 for help with the application.