Debt consolidation is a process through which you can combine all of your debts into one. The main goal of debt consolidation is to simplify your financial life by reducing the number of monthly payments you have to make on your monthly budget.
This can be done by combining all of your monthly payments into one monthly payment that is lower than the sum of the individual monthly payments you were making before.
You can use debt consolidation to combine several types of debt, such as
- Credit cards,
- Medical debt,
- Personal loans,
- Student loans,
- Car loans.
How to find the best debt consolidation company
The first step is to find out which debt consolidation company to use. You can start by looking online for reviews posted by previous customers, then call them for more information about their company and their customer service. One of the best companies is OT Credit PTE limited company. They can offer you the best personal loans that you can use to pay off your debts at low-interest rates.
Next, compare the services they offer with what you are looking for in a debt consolidator – there are many different types so make sure to look around before you sign up!
Finally, before signing any contracts or agreeing to anything with the debt consolidator, make sure that they are registered and licensed in your state.
How to evaluate to consider a debt consolidation company:
- You should first calculate your debt-to-income ratio and compare it with the ideal range, which is usually 35%-50%.
- If your income is sufficient enough to pay off all of your debts, then you should go ahead and do so. However, if not then you will need to consider debt consolidation as a possible option for getting out of debt.
- Next, create a list of all the loans that you have and determine their interest rates and balance amounts for each loan separately as this will be needed to consolidate them into one loan with a lower interest rate or figure out what type of new
Who can use a debt consolidation solution?
Debt consolidation can be used for both personal and business debts. It is also the common term used to refer to debt management plans (DMP).
Debt consolidation or debt management plans are often aimed at consumers with multiple forms of unsecured debt. Through this process, all creditors are contacted and an agreement is drawn up outlining how much will be repaid each month over a set period. The aim is to clear the debts by making lower monthly repayments that are easier to service.
While debt consolidation won’t clear your loans, the strategy makes it easier and less expensive to pay off debt. Managing one payment can also make it easier to stay on top of your bills and avoid late payments, which can hurt your credit score.
What you need to know about debt consolidation
Many people easily fall into debt after acquiring several loans from different money lenders, banks, and even individuals. The loans can easily accumulate to make a large loan that may be hard for the individual to pay.
Debt consolidation is the form in which, you combine all your loans and go to a great loan money lending company to pay all the individual loans for you and leave you with just one! That one is the one that you will need to pay.
1) Simplifies the debt repayment process.
When bills become too much, then life can become frustrating. The debt is the loans that you have, while consolidation is the combining together of the loans. Hence, debt consolidation is combined loans.
The debt consolidation plan helps you to easily combine all your unsecured credit cards and personal loans from different areas into a single loan. This helps you to simplify the debt repayment process.
1) Lowers your interest rates
With debt consolidation, you will be able to combine all your loans into one. Hence, when you combine all your debts into one, you will have less to think about and make it easy to track your loans.
This normally helps to ensure that you don’t struggle as an individual to pay the due. Most debt consolidation companies offer an interest rate of up to 10% while the other loan sharks, money lenders, and companies offer like 20-24% interest rates. It will be easier to consolidate and reduce the interest rate.
2) It is easier to select a loan tenure
Most credit card loans require a monthly minimum payment of 3% of the balance. If you don’t pay up on time, you may incur late payment fees. This can accumulate by a high percentage. Hence, if you choose a longer tenure, you will pay more interest over time.
Loan tenure is basically, the period from the date of disbursement of the loan to the date of the EMI payment closure date.
3) You are limited to using our unsecured credit cards
Once you acquire a debt consolidation plan from any of the reputable companies. You shouldn’t use any of your unsecured credit facilities. This is because any amount that you incur will not be consolidated in the plan.
Hence, when you opt for debt consolidation, know how best you can handle yourself to ensure you don’t get loans from other money lenders.
4) Meet all requirements
To get the debt consolidation plan, you need to be a Singapore citizen, have a steady income, have some debts, and provide all the other requirements. Hence, just be genuine about your loan issues to get the required help.
However, the debt consolidation loan excludes joint accounts loans, renovation loans, education loans, medical loans, and business-related credit facilities.
In the case that you don’t qualify for a debt consolidation plan, you can apply for the traditional personal loans offered by banks in Singapore. You can get one that will suit your preference. Once you get your loan, you can then pay off any outstanding loans you may be having. Debt consolidation is the way to clear off most of your debts effortlessly.