Following the economic challenges over the past few years. In addition to nearing government shutdown. Most Singaporeans have moved from having manageable debt. At present, it is gone to minimum unmanageable debt. Debt for some has spun out of control. Having a manageable debt means that a borrower is able to repay their debt. At the same time, they remain financially solvent.
Oversplurging on Credit Cards
Sadly, most Singaporeans with debt issues depend on credit cards. They also choose to use short-term loans, disregarding the existing issues. In some instances, they simply are not able to pay off their bills. This is without using these means. However, this leads to interest repayments that suddenly get out of control.
To most, this spells a financial trap which ends badly. Thus they find themselves facing unmanageable debt. However, when you look for a solution for your financial problems. Yet, fail to address the main causes of debt. It will only result in your getting into more debt in future. This comes about because when debts are merged into one loan.
All credit cards, as well as other newly accessible financial options, will be leveraged again. This starts the very process that brought about your seeking help. You will find yourself facing debt all over again.
Professional Consolidation Loan
Professional consolidation services are one of many reasons why many seek this option. This loan product not only offers the necessary resources. It offers help for borrowers to get rid of debt. More importantly, this option will help you address the main cause of the first debt. It is important for you to realize that all these services are not equal. Different providers will offer many varying service terms.
When you choose to use online resources to review the best debt consolidation loan. It will provide you with a complete list of the offers from different companies. It will also show the products they do not offer. It will include how a borrower should go about the process.
However, realize that there is a lot involved in debt management. This is beyond review companies and what companies offer. Each moneylender may have particular areas that make them stand out. This includes the methods they apply to help borrowers manage debt.
Above all, moneylenders have best practices that they should follow. As you review and consider the companies, ensure that you thoroughly examine each. At the same time stay away from any lender that will promise instant results.
The best place for you to start is asking yourself these three questions:
Are You Committing Assets To Consolidate Your Debt?
This may be the most crucial consideration. Like it can happen in some situations. It is possible for you to provide your home to consolidate debt. However, you should not take this step lightly. Although the interests are relatively low at present. However, using your home to guarantee unsecured debt is a risky move.
A responsible debt consolidation lender will only bring this option as the last resort. They will also ensure you keep at least 20 percent equity for your home. This is after you have taken out a credit line or even a second mortgage. At the same time, you still have to be open with your money lender. The intention is to ensure you do not incur penalties. Additionally, you do not incur unexpected fees.
Is The Lender Presenting Debt Consolidation As The Cure-All?
When a lender does this, then it is best you avoid them. Consolidating your debt involves a lot more than just merging all your debt. This is also about evaluating the grounds for your debt. It also has to do with getting counselling. It involves helping in understanding ways to avoid situations that led to the initial debt. Therefore, be careful with the lender you choose to work with.
Is The Moneylender Charging Unreasonable Fees?
Most providers do not anything different. That is from what the average person cannot do. However, they have the experience and connections. This is what allows their borrowers to merge debt more effectively. They at times also offer them better rates.
Keeping this in mind, the total rates charged by the lenders need to be manageable. They can come in the form of interest charged on personal loans. Or they can be upfront fees. Importantly, take a keen note of the total fees and interests of the consolidation loan. It should not exceed the overall interest of all debts you want to consolidate.
For instance, $10,000 credit card debt accruing 18% interest. When repaid using the minimum payments each month. It will take you 28 years and 6 months to repay. Within that period you will have paid $14,423.30 total in interest. This will bring your sum of principal plus interests to $24,423.30. The combination of payments, fees, and personal loan interest should not exceed this.
Actually, often times this figure needs to be substantially less. Consolidating the same $10,000 debt attracting 10%. Having a monthly amount of $250 paid for your loan. This will lead to the whole debt getting repaid in only over 4 years. And you only pay about $2,200 in interests. This will save you over $12,000. This is what you need to expect from any suitable consolidations company.
The above-mentioned considerations are 3 very important questions. Especially as you look into any type of loan for debt consolidation. However, there are more. Although there are some unscrupulous lenders in the market. Most of the moneylenders are transparent and dependable. Most will offer you access to bargaining and negotiation. This is one thing that most borrowers might not know about. Also, the ideal debt consultant will offer borrowers free consultation. This allows you to take concerns and any questions concerning their recommendations to your lender. You can also check with a certified financial advisor. In so doing you can get a sound second opinion.
Growing and maintaining your credit is not easy. However, managing excessive credit is equally tough. Through careful consideration of the options will help you make an informed decision. You will get to maintain a healthy credit. At the same time, you will to your finances will stay in order.