When Is the Right Time for a Debt Consolidation Loan?

For many Singaporeans, accruing both secured and unsecured debt is the only way to secure a home, a car, or funding for a business venture. Borrowing money also helps build up your CBS credit score. It does, however, become a problem when the amount you need to pay back each month has eclipsed your disposable income for the same period.

An average of 4,000 borrowers accumulate debts that are 12 times their monthly wages, sometimes more, each month in Singapore. You can keep yourself out of this statistic by considering a debt consolidation plan.

What Is a Debt Consolidation Plan?

Debt consolidation is a debt management strategy of combining all of your current debts into one account. Its purpose is to simplify your payments and spare you the added burden of high-interest rates. Instead of paying multiple creditors, you only need to pay one.

A debt consolidation plan includes the steps one must take, like budgeting and adjusting spending habits, towards paying off their consolidated loan.

When Should You Consolidate Your Debts?

As mentioned above, if your monthly dues are higher than your disposable income, it’s usually a sign that you should consider debt consolidation.

This doesn’t mean that you have to wait until you’re already struggling financially before you do something about your debts.

Below are some signs that you may have to apply for a debt consolidation loan and work with a financial adviser to manage your money.

You’re paying too much interest.

If three out of your five debts have huge interest rates, you may be able to save more if you consolidate them with a more palatable interest and payment term.

You’re just paying the minimum due or interest each month.

This is a clear indicator that your debts are already beyond your current ability to pay. If you’re still unable to pay all your monthly dues even after adjusting your lifestyle, consolidation can be one of your best options.

You forget to pay some of your bills.

It’s easy to lose track of what you need to pay every month when there are so many on your plate. If you’re accruing late payment penalties because there are just too many due dates and bills to track, consider paying them all off at once with a debt consolidation loan. You can just focus on this one loan afterwards.

You have a target date for clearing off all your debts.

Whatever the reason — whether you’re planning to migrate, build up a stronger CBS score, apply for a business loan once reach a certain age — debt consolidation can help you become debt-free within a determined period. That’s the beauty of consolidation: as long as you pay on time, you know that you’ll be cleared of all debts once your loan is paid off.

You want to pay off your debts and improve your CBS score.

Consolidation can help you achieve both at once with its simplified, single payment method and more affordable monthly dues.

If you want to enjoy the benefits of debt consolidation, you’re already in the right place. Capital Funds Investments offers consolidation loans and financial service specialists who can help you develop a refinance debt consolidation plan.

We can help you get the best debt consolidation plan that matches your current wages and takes into consideration your basic needs and wants.

Apply for a loan or get in touch so that we may answer any question you may have about our debt consolidation service.

Contact Capital Funds Investments today.