Are you not knowing the debt consolidation plan? Here we are to help you get complete experience about debt consolidation personal loan.
Debt consolidation is an arrangement made by a financial institution to consolidate all debts together. It is a process of piling up or summing up all the debts together into a single mortgage. Debt consolidation plans undertake only unsecured loans. Your unsecured loan can be your credit card loan. You cannot get off for a consolidation plan if you have secured loans. This is because a consolidation plan is only made for unsecured loans.
Under the debt consolidation plan, the debt consolidator expert undertakes all your documents for evaluation. The papers should concern only unsecured loans. Once the analysis is over, and the papers are approved, you become eligible for it. The debt consolidation expert puts your documents through n number of processing procedures. This is mainly to check whether the person is suitable for the loan or not.
STEPS TO FIND THE RIGHT PLAN
INSTITUTIONS SEARCH: The first step in finding an excellent consolidation loan is to do internet research of institutions. Every institution has its terms and criteria—the terms and standards are differing from institution to institution. To get a great deal out, you have to do you and extensive research. Another reason to do this research is to avoid getting into the trap. There are a lot of fraudulent institutions sitting to loot people’s money. People blindly trust financial institutions. But a lot of them are unaware of the malpractices that happen in fraud financial institutions.
There are hundreds of cases about fraud financial institutions. These financial institutions loot people’s money and vanish like the wind. It is challenging to catch these kinds of fraudulent institutions. Thus it is always advised to do and in the research before signing any contract with a financial institution.
SERVICES OFFERED: To get a fantastic deal, you have to check the services offered by financial institutions. It is prevalent for financial institutions to offer similar services. But there will be a shoe difference between their services. Take an example of McDonald’s and KFC. Though both the companies are into the same product line, the services and the quality offered to differ. Just like that, even in financial institutions, the services are the same, but the delivery pattern is different.
The delivery pattern is the main element that makes one institution different from the other. The way institutions interact with the clients forms a lot of difference. This directly affects the service pattern of institutions. There are various institutions least bothered about their clients. Their main motive is to get money from clients. Once this is done, they do not provide even customer assistance.
CALCULATE THE INTEREST: This is the main element that’s playing its role. The main reason people opt for a debt consolidation plan is to reduce the amount of interest somehow. The interest of credit cards varies between 25-30% in Singapore. In comparison, the interest on the debt consolidation plan varies between 8 – 10% of the total loan. This makes a massive difference between the amount payable.
The debt consolidation plans come with various criteria. To get the best deal out, you have to calculate the interest rate amount accordingly. This is mainly done to get an idea of the amount that you’ll be paying to the institution. This will also include the tenure of the loan. If the tenure of the loan is long, then you’ll be paying probably more amount on interest. This is because when the tenure is long, the interest amount on every EMI will also remain the same always for years.
CALCULATE YOUR DEBTS: Before getting into any plan, first, calculate your total debt amount of unsecured loans. If your debt amount is low, then getting into a debt consolidation plan is not a great idea. The debt consolidation plan is beneficial for those with a considerable amount of loans. If you have a smaller amount of credit, you can quickly clear it off within a short tenure paying less interest amount. But if you have a considerable loan amount, you can opt for a debt consolidation plan to increase the loan’s tenure. This will be beneficial to maintain the financial stability of your cash flow.
CHOOSE ACCORDINGLY: There will be n number of institutions offering you n number of plans. But you do not have to pitch in with excitement, blindly. Choose your debt consolidation plan wisely before opting for one draw a rough financial plan of your annual income. Put all your revenues on one side and expenses on the other. By this, you can estimate your savings. Based on this, you can choose the plan available in the market. Kindly do not get into a program that does not fit as per your financial policy. Most often, people get into this without doing any research. By doing this, they end up putting themselves in the vicious cycle of debt.
ELIGIBILITY TO MEET DEBT CONSOLIDATION PLAN
It is not easy to qualify for a debt consolidation plan. The debt consolidation plan comes with n number of criteria. This is because the program has to combine various unsecured loans under one room. Every single loan comes with different interest rate and tenure. Calculating individual interest rates, according to the mandate, is a critical task. Every loan differs from one another. This is the main reason the debt consolidation plan imbibes various terms and conditions. Let’s study the eligibility criteria imposed by financial institutions in Singapore.
- An individual to qualifies for a debt consolidation plan should be a major and a permanent resident of the country. Citizens are usually given more priority.
- Singapore personal loan does not fall into the category. Only your unsecured loans can be consolidated.
- The loan amount should be 12 times more than your monthly salary.
- Your annual salary should be a minimum of $30,000 and a maximum of $1,20,000. This is an essential criterion of a debt consolidation plan.