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Best Debt Consolidation Plans in Singapore (2024)

Compare the best debt consolidation plan in Singapore on Singsaver.Find the best plans with low fees, competitive interest rates, and flexible repayment terms to speed up your debt repayment. With a debt consolidation plan, you can combine your debts into one monthly payment to save you interest charges and the hassle of keeping up with multiple bills. Apply for your ideal debt consolidation plan on Singsaver now to achieve your financial goals.

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Debt Consolidation Plans Repayment S$30000 to be repaid in 3 years
S$
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S$ 30,000
S$ 50,000
yrs
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1 yrs
3 yrs
5 yrs
Flexi Loan Tenure No Processing Fee Up To 10-Year Tenure

HSBC Debt Consolidation Plan

HSBC Debt Consolidation Plan
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$
Flexi Loan Tenure Cashback On Approval Up To 10-Year Tenure

Standard Chartered Debt Consolidation Plan

Standard Chartered Debt Consolidation Plan
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

Offer Available

Welcome Offer
Up to S$500 Cashback
Up to S$500 Cashback

Valid until

30 June 2024

DBS Debt Consolidation

DBS Debt Consolidation
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

POSB Debt Consolidation

POSB Debt Consolidation
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

Citi Debt Consolidation Plan

Citi Debt Consolidation Plan
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

UOB Debt Consolidation Plan

UOB Debt Consolidation Plan
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

OCBC Debt Consolidation Plan

OCBC Debt Consolidation Plan
Monthly repayment S$
Annual Interest Rate
 %
EIR
 % p.a.
Processing Fee
S$

What is a Debt Consolidation Plan (DCP) and How Does it Work?

A Debt Consolidation Plan (DCP) is a financial solution that combines multiple debts into a single loan with lower interest rates and more manageable repayment terms. Here's how it works.

Combining Debts

With a Debt Consolidation Plan, you can consolidate various types of debts, such as credit card balances, personal loans, and other unsecured debts, into one loan. This simplifies your monthly payments as you'll only need to manage one loan instead of multiple debts.

Lower Interest Rates

Debt consolidation plans often come with lower interest rates compared to the interest rates on individual debts, especially credit card debts. This can lead to significant savings on interest payments over time.

Extended Repayment Period

Debt consolidation plans typically offer longer repayment periods, allowing you to spread out your payments over a more extended period. This can help reduce your monthly financial burden and improve your cash flow.

Fixed Monthly Payments

With a DCP, you'll have a fixed monthly payment amount, making it easier to budget and plan your finances. This stability can be beneficial for those looking to regain control over their debt situation.

Professional Assistance

DCPs often involve financial institutions or credit counseling agencies that provide professional guidance throughout the consolidation process. They can help negotiate with creditors, structure the loan, and provide financial education to help you avoid falling back into debt.

Credit Score Impact

While consolidating debts through a debt consolidation plans can improve your overall financial management and make repayment more manageable, it's essential to note that it may initially impact your credit score. However, as you make timely payments and reduce your overall debt burden, your credit score can gradually improve.

Who can Apply for a Debt Consolidation Plan?

To be eligible for a Debt Consolidation Plan (DCP) in Singapore, applicants typically need to be Singaporean citizens or Permanent Residents aged 21 to 65. They must have stable employment, earning between S$20,000 and below S$120,000 per annum with Net Personal Assets* of less than S$2 million. 

Additionally, applicants must have total interest-bearing unsecured debt on all credit cards and unsecured credit facilities with financial institutions in Singapore that exceed 12 times their monthly income. Good credit history, no ongoing bankruptcy proceedings, and meeting the institution's Debt Servicing Ratio (DSR) requirements are also key factors.

*The term "Net Personal Assets" refers to the total value of the individual's assets less his liabilities. Assets should be substantiated by documents provided by the applicant.

How to Apply for a Debt Consolidation Plan?

Applying for a Debt Consolidation Plan (DCP) in Singapore generally involves the following steps below:

Assess Eligibility

Determine if you meet the eligibility criteria set by financial institutions offering DCPs. This includes citizenship status, age, employment status, total debt amount, creditworthiness, and other requirements.

Choose a Provider

Research and compare DCPs offered by different financial institutions. Consider factors such as interest rates, fees, repayment terms, and customer service reputation.

Prepare Necessary Documentations

Prepare the necessary documents for the application process, including proof of identity (e.g., NRIC or passport), proof of income (e.g., payslips, income tax statements), and details of existing debts to be consolidated.

Submission of Application

Complete the DCP application form provided by your chosen financial institution. Submit the required documents along with the application form either online or at the institution's branch office.

Credit Assessment

The financial institution will conduct a credit assessment to evaluate your creditworthiness, debt situation, and ability to repay the consolidated loan.

Loan Approval

If your application is approved, you will receive a loan offer detailing the approved loan amount, interest rate, loan tenure, monthly repayment amount, and any other relevant terms and conditions.

Review and Acceptance

Carefully review the loan offer, including the terms and conditions. Ensure you understand all aspects of the DCP before accepting the offer.

Loan Disbursement

Upon acceptance of the loan offer, the financial institution will disburse the approved loan amount to settle your existing debts with creditors. You will then make monthly repayments based on the agreed-upon terms of the DCP.

Debt Management Plan

Keep track of your monthly repayments and adhere to the repayment schedule to avoid any penalties or late fees. As part of your debt management plan, consider setting up automatic payments or reminders to ensure timely repayments.

What To Do If Your Debt Consolidation Plan Application Gets Rejected?

If your Debt Consolidation Plan (DCP) application is rejected in Singapore, consider alternatives such as debt restructuring with creditors, enrolling in debt management programs, negotiating debt settlement, or as a last resort, exploring bankruptcy. Financial counselling can help assess options and improve financial health for future debt management solutions. Each option has pros and cons, so evaluate based on your situation and seek professional guidance as needed.

How to Avoid Going Into Debt Consolidation?

To avoid the need for debt consolidation, it's essential to implement proactive financial strategies:

  • Create a detailed budget that outlines your income and expenses, prioritizing essential needs and savings before discretionary spending.
  • Live within your means and avoid overspending to prevent accumulating unnecessary debt.
  • Build an emergency fund to cover unexpected expenses and reduce reliance on credit during emergencies.
  • Prioritize paying off high-interest debts to minimize interest charges and use credit cards responsibly by paying off the full balance each month.
  • Monitor your credit regularly for errors and unauthorized accounts, and seek financial education to improve your financial literacy.
  • Avoid impulse purchases and practice mindful spending, negotiating with creditors if financial difficulties arise.
  • Consider seeking professional advice from a financial advisor or credit counsellor for personalized guidance on managing finances effectively and avoiding debt consolidation.

These proactive steps can help you maintain a healthy financial outlook and avoid the need for debt consolidation.

Frequently Asked Questions (FAQs)

How to choose a Debt Consolidation Plan?

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When choosing a Debt Consolidation Plan (DCP), consider interest rates, fees, repayment terms, loan amount, creditworthiness requirements, flexibility in repayment, customer service quality, reviews, reputation, and financial counseling availability. Evaluate these factors to select a DCP that aligns with your financial needs and goals effectively.

What are the disadvantages of Debt Consolidation Plans?

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Understanding the pros and cons of debt consolidation plans is crucial. On the positive side, they simplify payments, lower interest rates, and offer structured repayment. However, there's a risk of accumulating more debt and impacting credit scores. Fees and collateral requirements are also considerations. It's important to weigh these factors and consider alternatives for effective debt management.

Does debt consolidation hurt your credit score?

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Debt consolidation itself doesn't inherently hurt your credit score. In fact, it can have positive effects if managed well, such as streamlining payments and reducing overall debt. However, certain aspects of debt consolidation, such as opening a new credit account or closing multiple accounts, can temporarily impact your credit score.

 

Additionally, missed payments or defaulting on the consolidation loan can negatively affect your credit score. It's essential to manage your debt consolidation responsibly and make timely payments to minimize any potential negative impact on your credit score.

Can I still use my credit card after debt consolidation?

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Yes, you can still use your credit card after debt consolidation. Debt consolidation involves combining multiple debts into one loan with a lower interest rate, but it does not restrict your ability to use credit cards.

 

However, it's crucial to use your credit cards responsibly and avoid accumulating new debt that could offset the benefits of debt consolidation. Make timely payments on your credit card balances and adhere to the repayment schedule of your consolidation loan to maintain a healthy credit profile.

I found a Debt Consolidation Plan with a lower interest rate than my current one. Can I refinance?

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Yes, you can refinance your current Debt Consolidation Plan (DCP) if you find another plan with a lower interest rate. Refinancing involves taking out a new loan to pay off your existing DCP, typically with better terms such as a lower interest rate or more favorable repayment terms.

 

However, before refinancing, consider any fees or charges associated with closing your current DCP and opening a new one. Evaluate the overall cost savings and benefits of refinancing to ensure it's a financially advantageous decision in the long run.

What is the typical tenure of a Debt Consolidation Plan?

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The typical tenure of a Debt Consolidation Plan (DCP) in Singapore ranges from 1 year to 10 years, depending on the financial institution and the borrower's financial situation. However, most DCPs offer loan tenures between 3 to 5 years on average.

 

The loan tenure is agreed upon during the application process based on factors such as the total amount of debt to be consolidated, the borrower's repayment capacity, and the terms offered by the financial institution.

 

It's important to choose a loan tenure that allows for manageable monthly repayments while considering the total interest cost over the loan period.

Can I refinance Debt Consolidation Plans?

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Yes, you can refinance your DCP. In the event that you find a bank or FI with a better deal, you can transfer your current DCP over. Notify your current bank/FI of your intent to refinance and they will be able to advise you on the process and fees, if any.

 

However, do keep in mind that you may only do so at least 3 months after the approval of your latest DCP. The transfer is also subject to any penalty fee imposed by the original DCP financial institution for early termination.

Is it best to consolidate debts?

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Consolidating debt can be the first step to helping you get out of debt, especially when you have too much outstanding debt to pay off. A DCP offers relatively low interest rates, when compared to other high interest debts such as credit card bills.

 

You can also get a DCP from a bank that you do not currently bank with, giving you more flexibility when it comes to choosing a DCP that suits you. You can also read this guide on DCP, what it is and how it works in Singapore.

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