What Should I Consider Before Applying For Debt Consolidation Plan In Singapore?

By Hope Huntley 2 years ago

Emergencies will arise at any time in people’s lives, and it becomes tough to meet the emergencies without adequate liquid cash. Opting for a personal loan is a good option to meet the requirement of emergencies. Again, if you already have more than one unsecure loan, choosing a debt consolidation plan will be the right choice. Borrowers can select the right debt consolidation loan money lender to get the benefit of this scheme.

What is DCP?

DCP or Debt consolidation plan is a process that helps borrowers to consolidate all unsecured loans into one single loan. Once borrowers opt for this scheme, they need not make repayment of loans individually. They can repay EMIs of all loans one time in a month. Individuals need to search for licensed money lending companies to get the best plan.

Factors to consider before applying for DCP

No doubt, a debt consolidation plan is good for those borrowers who have more than unsecured loans and need to make numerous repayment of loans. But, before selecting the DCP plan, one should consider the following factors.

  • Additional 5%

Once your application for DCP gets approval, all your unsecured loans will come under one single loan. The total loan amount will be inclusive of outstanding interest along with an additional 5% interest on the total amount. This 5% charge will cover all other expenses like late payment, extra fees, along with late fees.

  • Refinancing

Sometimes, it happens that borrowers are hardly aware of financial institutions while selecting DCP. But, later, they find that these institutions are not of their preferences, and hence they want to change the loan company.

But refinancing will cost you more, and here, you need to wait for at least 3 months to get approval for refinancing. While approving refinancing, the first financial company will charge a penalty. Hence it is suggested to take suggestions from your financial advisor before you want to change your financial company.

  • Approved DCP, not always entire Debt Amount

There is no doubt that every debt consolidation money lender is here to help borrowers repay their debts without hassle. However, in some circumstances, like low salary or low monthly income, DCP cannot cover the entire debt amount.

  • Suspended unsecured loans

The DCP plan aims to consolidate all loans together and help the borrowers repay the instalments. Again, once this plan gets active, you will not be allowed to apply for new unsecured loans. You will not be eligible to use other credit facilities. However, financial institutions will help you with a revolving credit facility to help you clear all debts.

Benefits of acquiring Debt consolidation loan from licensed money lenders

Many borrowers are less aware of the benefits of getting DCP from licensed money lenders. Experts suggest that if you want to enjoy the full benefit of a debt consolidation plan, you need to opt for a licensed money lending company. In general, unverified money lenders charge huge interest rates than licensed financial institutions. Hence, once you are planning to have DCP, you need to select money lenders to get the following benefits.

  • Borrowers will have DCP at a low-interest rate
  • You will need to pay low monthly interest as per your capacity.
  • The application process is hassle-free
  • You can select loan repayment time as per your preference.
  • Money lending companies will approve loans fast. 

Tips to avoid online loan scam

A debt consolidation plan benefits those who want to repay all unsecured loans together. But you must stay safe from online loan scams while searching for money lenders near me. Factors which you need to consider before applying for an online loan are mentioned here.

  • Online loan application is common in recent times, and it increases the opportunity for unlicensed money lenders to dupe borrowers. In general licensed money lenders will opt for face-to-face verification for DCP, whereas unlicensed money lenders will approve loans via mail or SMS.
  • Unlicensed money lenders always ask you for extra processing fees and other charges. Whereas licensed money lenders will charge 10% as an admin fee, and they follow the regulation of the Government.
  • Whenever you apply for an online personal loan, it is necessary to check whether these financial companies have any physical addresses. You can visit their offices for verification to avoid online scams.
  • Unlicensed online money lending companies will do advertisement through various means. But, licensed companies always follow Government rules and will not advertise via other channels.

Hence, those factors are required to follow before you apply for online DCP.

Conclusion

Individuals having more than one unsecured loan can go through all the above details and factors before applying for a debt consolidation scheme. Again, do you want to know what’s the lowest you can get a loan for? Read all essential factors here.