Debt can become a source of personal frustration if you don’t know how to organize it. Debt, by itself, is not a bad thing. Debt is proof that a financial institution trusts you and your ability to pay off a loan.
Having several debts at the same time can be a real headache to settle them, not only because of how complicated it becomes both to schedule payment dates and to memorize the exact amount that we must pay to each one and, most importantly, to gather the necessary liquidity to meet these commitments.
However, it is often difficult to see the solution to payment problems if the options have not been exhausted. Applying for debt consolidation may be the best solution for you.
Debt consolidation is an option available in the Singapore financial market to be able to meet, according to your possibilities, the commitments that you have for having acquired several loans.
In this scenario, one of the options to be able to unify all our debts is the consolidation of them, through a loan that a licensed money lender like OT Credit can offer us, which is used for the payment of debts, leaving only one to settle.
What is Debt Consolidation?
Debt consolidation means combining all your debts in a single loan at a lower interest rate or for a longer period so that it is possible to pay them off. When you have many financial commitments with different institutions, it is difficult to organize your payment dates and keep up to date.
So for people who are not very organized, consolidating their debts into one can be a suitable alternative to, at least, not be late in payments because they forgot the cutoff date.
To know if a debt consolidation loan in Singapore is appropriate, it is necessary to analyze the financial situation of each debtor and consider the advantages and disadvantages that this option represents.
With a debt consolidation loan in Singapore, it’s important to first know where your credit score is. For people with a “poor” credit score, it can be difficult to get approved for a new loan for consolidation. People with “fair” to “exceptional” credit scores will have an easier time getting approved for a new loan and will also be eligible for a lower interest rate. Consequently, knowing your credit score before applying for debt consolidation loans will help you choose the right loan and avoid incurring multiple hard credit inquiries in a short period.
Many providers of debt consolidation loans are specialized and licensed money lenders like OT Credit that do not accept deposits like traditional banks and credit unions. They first pay your old creditors directly and then send you a monthly bill for the balance, or send you a check or direct deposit for the full amount. Here are some debt consolidation facts which you didn’t know-
1.- Combine several payments in one. It allows you to get organized and the convenience of making a single monthly payment.
Debt consolidation is when you combine all your debts, no matter how varied, in a single loan, at a lower interest rate, or for a longer period, to make it easier for you to pay them off. Thus, you will only have a debt focused on a monthly payment.
When you consolidate your debt with OT Credit, you take multiple payments and merge them into one. In return, it’s a lot easier to stay organized. Plus, you no longer have to decide who to pay first and how much to send to each creditor.
After debt consolidation, you only have one debt payment to manage instead of several different ones. You don’t have to worry about different billing statements, payment amounts, and due dates. Managing an individual debt will surely relieve some of the stress of the debt.
2.- Get lower interests. If you have good credit, most options for consolidating your debt, whether a personal loan or a line of credit on your home, offer lower interest rates than credit cards.
How much money do you pay out in interest each month? If you have a lot of debt, spread across multiple loans and/or credit cards, you may be paying hundreds or even thousands in financing costs. When you pool your debts with OT Credit, you only pay interest on one loan and often get a lower interest rate. In return, you can save a lot of money right away.
It is necessary to be the owner of some property, even if it is mortgaged, to carry out the consolidation.
When canceling other debts, such as the interest rate on mortgages is lower than that of personal loans, credit cards, etc. You save a lot in interest, therefore, the debt is reduced. With debt consolidation, you should go for a lower rate loan or credit card. Lower interest means a lower cost of debt overall.
3.- Negotiate directly with the institution that can offer you the debt.
With OT Credit, You can choose the plans according to your needs, and going with this option should benefit you to the maximum, therefore, you must obtain a plan that goes ad hoc to your monthly liquidity, thus you will increase the chances of meeting the credit payment in time and form.
Check well before signing, since it depends on the institution with which you process this service, you can get better conditions on your interest rate, the term of the debt, and the amount, which can lead you to generate important savings.
The first is a loan that you can only request being up to date with the payment of your installments to pay off the original loan and the second only to negotiate the terms and installment value, both with the same institution where you have the debt.
4..- Reduce monthly payments.
By spreading your payments over a longer period, debt consolidation usually entails a lower monthly payment. The lower payments make a tight budget easier.
If you’ve been trying for months to pay off your debt, no matter what it takes, you are probably interested in lowering your payments. Since you only have one payment and one interest rate lower, your monthly payout will be much less.
If the interest on your new loan is lower, your monthly payment may be too. In addition, if you pay on time and consistently, you would avoid any type of penalty for late-payments and for exceeding the credit limit. With consolidation, it is possible to convert all current debts (short or long term) into a single minor and long-term debt, and pay less monthly.
5.- Pay 100% to your creditors. It would pay off debts to your creditors and preserve a positive payment history if the accounts have been in good standing with your creditor.
Debt consolidation can help you lower your monthly payments and improve your credit, but only if you strictly adhere to a payment plan because consolidating debt affects credit.
It will take some time, but if you make your new loan payments on time, your credit scores may progressively increase. Your payment history is the most important factor in your credit scores, so you should always pay on time.
When you consolidate your debts, the credit line of your cards will not be affected, but it is advisable to pay off your consolidated debt is that you do not spend more than what you do not have, we know that it is not an easy action to do carry out but everything is possible if you manage to organize your income and expenses.
Now, surely you are wondering at what point is it important to consolidate your debts? Ideally, it is best to do it before falling into a state of delinquency and you should be clear that if you are behind in payments, you probably cannot qualify for consolidation of debts, another situation to consider is that it is better if your debts are in different banks and are different from each other; In addition, one of the first things you should become aware of is that you must put your expenses in order because you must put a heavy hand on your finances so that you do not fall back into the vicious circle of buying something beyond what you can afford.
It is also recommended if you have no idea how to make a payment plan appropriate to your income, expenses, and financial possibilities, hire the services by OT Credit experts to evaluate your situation and create the best strategy for you.