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What is a Debt Consolidation Loan?

Published by Handy Work on

Banks, credit unions, and other lenders often offer a debt consolidation loan to consumers who are in a financial crisis.

If you have an exorbitant amount of debt, it is better to pay it off all at once rather than in smaller payments. By paying off your debts all at once, you can save money on interest.

If you are considering a debt consolidation loan, it is important to make sure that you understand what this type of loan entails.

For example, if you want to know how much your monthly payment will be after you pay off your debts with a debt consolidation loan, then read on!

What is a debt consolidation loan?

A debt consolidation loan allows borrowers to combine all their debts into one loan e.g car loan, credit card, or personal loan into one single debt repayment plan where they pay only one monthly installment to one creditor – this will allow them to pay off their debts faster and save them lots of money in interest charges over time because they are repaying only one loan instead of multiple loans with different interest rates and repayment periods.

What are the eligibility requirements for debt consolidation loans in Singapore, Malaysia, Indonesia and Philippines?

For borrowers seeking debt consolidation loan in Singapore, there are usually two options available for borrowers who are looking to consolidate their debts into a single loan:

1) Debt Consolidation Loan

2) Personal Loan.

Both options usually require borrowers to have good credit history and monthly income to be able to receive approval for a debt consolidation loan or personal loan from banks or financial institutions.

As mentioned above, some banks or financial institutions may require additional security (i.e pledge an asset) in order to reduce their risk appetite or mitigate the default risk of the borrower.

For borrowers seeking debt consolidation loans in Malaysia, personal consumer loans’ interest rates also vary depending on your credit profile and how much the lender is willing to lend you. Interest rates will change depending on your credit profile and how much the lender is willing to lend you.

The lowest interest rate offered by banks and financial institutions in Malaysia is 8% p.a., while the highest is 25% p.a.. Interest rates also varies depending on which bank you choose to apply from – this also applies to Singaporeans who apply for personal loan or debt consolidation loan in Malaysia.

What is a Debt Consolidation Loan?
Photo by Allef Vinicius on Unsplash.

Debt Consolidation in Indonesia

For borrowers seeking debt consolidation loan in Indonesia, usually banks and financial institutions offer between 10-25% p.a.. But the interest rate will vary from one bank to another and will depend on your credit profile.

Interest rates also varies depending on which bank you choose to apply from – this also applies to Singaporeans and Malaysians who apply for personal loan or debt consolidation loan in Indonesia.

Debt Consolidation Loan in the Philippines

For borrowers seeking debt consolidation loan in Philippines, there are usually two options available for borrowers who are looking to consolidate their debts into a single loan:

1) Debt Consolidation Loan

2) Personal Loan.

Both options usually require borrowers to have good credit history and monthly income to be able to receive approval for a debt consolidation loan or personal loan from banks or financial institutions.

As mentioned above, some banks or financial institutions may require additional security (i.e pledge an asset) in order to reduce their risk appetite or mitigate the default risk of the borrower.

What is a Debt Consolidation Loan?
Photo by Katie Harp on Unsplash.

How do I apply for a debt consolidation loan in Singapore, Malaysia, Indonesia and Philippines?

Applying for a debt consolidation loan in Singapore, Malaysia, Indonesia or the Philippines is very easy. You will receive step-by-step guidance on how to fill up the online application form on the bank’s website.

After you have filled up the online application form, you need to provide some supporting documents such as your latest 3 months payslip(s), identification card(s), and/or passport(s) of the borrower/s and guarantor(s) if any.

After you have submitted your application form, the bank will review your application within 7 working days (excluding public holidays). If they feel satisfied with your profile, they will send you an approval letter (if approved) via email or otherwise contact you to explain why they rejected your application.

Choose the Best Loan for You

This article has discussed the debt consolidation loans, how they work, and how to choose the best loan for you.

While this article only covers the basics of debt consolidation loans, it is a good place to start. If you want to learn more about this type of loan, check out our blog, HandyWork, now!


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