2020 and 2021 have been tough years for most Singaporeans because of the effects of the COVID-19 pandemic. Even though people have a reason to smile because things appear to be improving, many are those who have been left with multiple debts, and managing them is very challenging. If you have many high-interest unsecured debts, the best way out is consolidating them.

Debt consolidation involves wrapping out all the current unsecured loans into a single loan (debt consolidation loan), meaning that paying them will be easier. Keep reading to learn about the four main things that you probably never knew about debt consolidation in Singapore.

A Debt Consolidation Plan Can Help You Cut Down Interest Rates

While the idea of taking another loan to pay another might sound like it is about to push one deeper into trouble, take a closer look and you will realize the opposite is actually true. If you select the debt consolidation loan in Singapore well, it might help to cut down the overall interest rates. For example, you can get a lender willing to approve your debt consolidation loan with an effective interest rate of 7%-10%, which is way lower than 20%-27% that is charged by credit cards per annum in the country.

You Can Select the Loan Tenure when Picking the Plans

The primary goal for debt consolidation plans is to make credit payments manageable and ultimately give borrowers control over their finances. When looking for a debt consolidation plan to work with, you have the opportunity to choose the preferred term. Consider this like any other loan and target to clear it as fast as possible to get out of debt. If you want to be paying a smaller amount every month, a longer tenure might be a better option. However, longer tenure means that you will end up paying more for the loan.

Unsecured Credit Facilities are Closed after a Debt Consolidation Plan is Approved

One of the methods of helping you avoid falling back into uncontrolled debts is not using unsecured credit facilities. Debt consolidation plans follow the same analogy. Once your debt consolidation plan in Singapore is approved, your existing unsecured credit facilities, such as credit cards will be suspended or closed. This means that for the entire period of debt consolidation, you will not be able to borrow more money.

Depending on the lender you decide to work with, it might be possible to arrange for some limited credit for daily expenses. While it is a good idea because people still need to meet their daily expenses, a better idea would be to avoid borrowing completely. Consider cutting down unnecessary costs to release more cash for paying the loan and personal expenses.

You can Apply for a Debt Consolidation Loan Easily Through Lendela

Now that you know how debt consolidation loan works, we must indicate that the process of application can be pretty challenging. Most lenders in Singapore have dozens of terms and conditions that borrowers are required to follow, and it can be a tough task preparing applications. However, the process of applying and getting your loan approved has now been simplified if you use Lendela.

Lendela only requires users to visit their site and make a short application. Then, they use an algorithm matching program that helps to identify lenders who are ready to accept conditions such as yours. Once the applications are forwarded to these lenders, they give their offers, which you are required to review. Finally, pick the preferred debt consolidation plan, and sign off the agreement in the lender’s office.