Debunking Misconceptions about Debt Consolidation

Recent reports have shown that young people in Singapore, most of them in their 20s, have been increasing debt since 2020. The Credit Bureau of Singapore explains that the average among personal loans and overdraft balances for young Singaporeans below 30 years old is around $49,689.

As specialists in debt management and debt consolidation plans, Capital Funds Investments noted that Singaporeans may have accrued more debt due to lowered interest rates, pandemic unemployment, or less income.

Debt consolidation as a solution

The true crisis begins when the time comes to pay off the debts. Now that global economies are slowly recovering, you may find yourself facing several personal loans and overdraft fees that you have difficulty paying off.

One solution that can help is debt consolidation. However, due to some misconceptions about the process or how it works, especially if you’re inexperienced in debt management, you may hesitate to consider it.

But here is the truth behind the misinformation.

They cost much more to pay off

The primary mistake is to think that you need to borrow money to pay off your debts. Remember that the loan cost will be significantly influenced by the amount of interest that needs to be paid on it.

If you approach a lender for money to pay off your debt, you might face a hefty interest rate. But most debt consolidation plans have far more reasonable interest rates, lower than even some credit cards.

It damages credit score

While most debt consolidations require hard credit pulls upon application, they don’t damage your credit score. At most, it will take a few points. But in the long-term, it may improve your credit score as you can now pay off your debts promptly. Paying off your debts promptly will carry a heavier weight on your score.

It leads to more debt

This is one of the most common misconceptions about debt consolidation. Many people suggest that because you’re able to pay off or wipe your debts immediately, you’ll end up right back to the same spending habits that brought you towards debt consolidation in the first place.

But many debt management specialists who offer debt consolidation plans also discuss credit counseling during the process. That consultation aims to provide debtors with avenues to recover from debt, including how not to fall back into the same credit problems as before.

It takes a lot of time

An excellent loan management service won’t make you go through lengthy, arduous procedures. The process should be simplified and efficient, with accessible application services that could be done in person or online, allowing you to send or upload the necessary documents. Ideally, this should only take a week at most.

Consult with reliable experts

The way to get the most out of debt consolidation is to consult with debt management specialists who have had plenty of experience consolidating personal loans and overdrafts. This is a strategic solution to a stressful financial crisis. Therefore, you need to entrust your situation to an institution with the necessary knowledge to help you plan how to best overcome it.

Capital Funds Investments aims to help Singaporeans settle their debt problems with a comprehensive consolidation loan plan that brings together your debts, joint accounts, credit cards, and more. We will help you lower your monthly payments through lower interest rates, making it more manageable to pay off your debts.

Consult with us today to speak with one of our specialists so we can get you on the road to paying off your debts.