Debt Consolidation Plan: Important Things You Know Before Taking One
Third-party Accounting system
If you are tired of making multiple payments to multiple institutions, then this is the option for you. A third party gives a debt consolidation plan for systematically studying your accounting system. You can entirely rely on debt consolidation institution for the analysis. The institution helps you settle all your unsecured loans in one go. All you have to do is provide all your unsecured loan documents to them. By doing this, you give them the complete authority to play over the loan.
These third parties collect all your information on the unsecured loan and make the payments. The payment is made to the financial institution from which you have taken the loan. The debt consolidation institution pays back the money with the interest amount. The debt consolidation firm sums up all the amounts paid by them in a row. The sum of the amount is shown as the principal amount, and a rate of interest is given to you. As a debt consolidation client, you will be paying back the principal amount to the debt consolidation institution with interest. You are required to pay the interest amount till the last payment you make.
The debt consolidation plan was launched in Singapore in the year 2017. There are multiple institutions in Singapore that offer debt consolidation plans. Different agencies have different terms and conditions. Dear readers, it is your keen responsibility to do in-depth research of the institution before getting into one. These companies take money from you and put you into a massive cycle of debt.
For a layman, it is difficult to understand the terminologies of finance. Making use of this opportunity, the fraudsters company loot the individuals. Every one or the other day, we see the news of fraudulent on our TV. This happens only because of your own negligence.
No single individual can harm you without your own consent. Thus it’s essential to do in-depth research of the institutions before getting into an agreement.
There are hundreds of financial institutions available in Singapore. But every different institution has identical plans to offer. There will be hardly any differences in the program. The interest rate the institutions offer varies between 8-10% in Singapore. This is the standard ratio. You will not find any firm charging more or less than this. This is because the industry has a mutual understanding to run the business.
COUNSELING IS IMPORTANT
You cannot get into any plan without counseling. Debt consolidation is a broad concept. It has layers and layers deep down into the plan. It’s not an ordinary person’s job to decide on the plan. It is essential for you to get advice from a financial advisor.
A financial advisor is an individual expert in the field of analyzing financial subjects. The advisor will give you complete details of the debt consolidation plan according to your financial income. The financial debt plan is also decided based on the amount of loan you have taken. The financial advisor will help you analyze your complete financial plan keeping in mind the debt amount.
IT’S NOT FOR EVERYONE
The debt consolidation plan is not for everyone. The plan comes with various terms and conditions. The terms and conditions of the plan are essential because of its nature. The debt consolidation plan is a little riskier on the other side. This is because of the combination of various loans put together. Debt consolidation loans are not given to a non-citizen member. It is only given to permanent residence or the citizens of the country.
Debt consolidation plans will only be approved if your loan amount is 12 times more than your salary. It will only be accepted if your annual salary is min $30,000 or max $1,20,000 in Singapore. It will be given to you if you have loans only under the category of unsecured loans. You will not be given a debt consolidation plan if you have secured loans. Debt consolidation doesn’t work with secured loans from financial institutions.
This is the most effective way to reduce the burden of your debt. Debt consolidation institution players each and every unsecured loan with easy steps. The loans are cleared in a minimum period of time. Loan’s feedback by the financial institution is along with the interest rate. The debt consolidation firm piles up all your unsecured loans into a single. By this, the burden of paying all the unsecured loans back reduces. This is the most effective way to reduce your burden of loan. It effectively works with your unsecured loans and makes them into a single loan. This is the main reason it is called the best debt consolidation loans.
YOU ARE STILL IN DEBT
A lot of people think that by opting for debt consolidation, they get rid of debt. This is a colossal myth people believe in. Debt consolidation is a method under which a third financial institution clears your existing and secured loans. Once the current unsecured loans are removed, the debt consolidation institution sums the amount together. They arrive at the principal amount by adding the total payments made on your behalf. After the estimation of the principal amount, they reach an interest rate. The interest rate is decided based on the total loan amount and the tenure period.
NO MORE USING THE EXISTING PLAN
Before getting into debt consolidation plan, keep in mind to stop your existing loans if you are opting for debt consolidation for a credit card loan, you have to stop the service then and there. The additional amount of loans taken from the existing financial institution will stand invalid in the eyes of the debt consolidation plan. Debt consolidation firm will reject your request for opting for the plan. You cannot continue the service of the existing financial institution after you have got into a debt consolidation plan. The debt consolidation plan is considered a fast cash loan in Singapore.