Debt Consolidation is a process that helps customers to pay off their debts and liabilities using different forms of finance. It is best known for the Refinancing protocol, in which a customer takes out a loan to pay off their existing outstanding. Moneylender uses the new loan to meet the other debts. Companies offer these loans like a home equity line of credit. It focuses on consolidating the repayment of liability.
In this process, the investments don’t erase the actual debts but help transfer the customer’s investments.
This process involves a debtor and a creditor who delegate their loans using different favorable payoff terms. This payoff terms include the lower interest rate and lower monthly payment. Debt Consolidation helps the consolidation loan money lender to clear all his debts more affordably. It mainly aims to set goals that include repayment of loan debt with a low-interest rate and reducing the creditors.
Debt Consolidation doesn’t help repay debts or loans and helps create a detailed budget that includes daycare, pet food, and others. A money lender can manage their investment regarding any debt consolidation from their home or anywhere. We all know that maintaining a debt is quite hard, but customized loans can make it easy, affordable for the money lenders. It only requires customer’s salary receipts, KYC documents, Employee ID, Bank Account Statements, and IFSC Code. They also guide in choosing the best personal loans.
Best Personal Loans:
If a customer is drenching in debt with full of unpaid loans, it can make sense to consolidate debt into one monthly payment. A consolidating loan can bear all of his outstanding and can merge it to meet existing obligations. Instead of paying loans one by one, a customer can take personal loans to pay off their debts within no time. It also increases the potentiality of collecting the asset or money from a debtor.
Types of personal loans-
- Personal loans– In case of personal debt consolidation, personal loan helps a lender borrow money from an institution to meet their outstanding. A customer can combine his existing debts to consolidate by using a single loan.
- Home Equity Loans– A customer can keep his house as a mortgage. The bank issues loan based on their ability. If the customer unable to repay the loan in time, he can lose his home as the bank has the legal right to take off that mortgage.
- Balance Transfer Credit– These types of loans confer a different avenue. In this route, a particular card called a credit card helps the customer to transfer their balances into one place to pay off their outstanding.
Types of Debt Consolidation:
There are two types of Debt Consolidation-
- Secured Loans- A secured loan is a type of loan in which the borrower promises assets such as car, property, or land as concomitant for the taken loan. Thus, the debt is wholly secured. If the borrower refuses of unable to pay the mortgage, then the creditor can take off his concomitant asset to regain his money. Secured loans always come with a lower rate of interest as compare to the unsecured loans.
- Unsecured loans refer to that type of mortgage where the borrower doesn’t keep any asset as collateral. Companies issues loan to the moneylender based on their ability to repay the loan. Unsecured loans are also known as individualistic loans. If the borrower cannot pay the mortgage, the lender can take legal action against the borrower to get some debt.
Best Ways To Consolidate Debts-
There are several ways of debt consolidation. The best way to consolidate debt varies from person to person, according to their ability and circumstances. For some people, paying off of the small debts means the best way of consolidating debts. For others, transferring balances to one credit card makes them feel good to consolidate their mortgage as it involves fewer risks than the others. The consolidation of debt mainly focuses on avoiding the frequent taking of additional obligations.
- Non-profit credit counseling agency provides the best way to consolidate debt amongst all. It helps in arranging the mortgages into a single outstanding. It also advises the customer regarding the best course of action.
- Transfer of unpaid balances with a lower rate of interest.
- Taking out personal loans helps the money lender combine his existing outstanding to consolidate their debt by using a single loan.
- Use of HELOC (Home Equity Loan of Credit). It is the most effective way to consolidate a customer’s debt with a lower rate of interest.
- A do-it-yourself consolidation is there for the money lenders to transfer multiple credits card balances to a single credit card. It involves a grace period for the customers within whom they have to pay off their outstanding loans and debts.
- A 401(k) Retirement plan is available for past employees. Under this plan, they can borrow money from their balance to pay off their credit card debts. This plan also guides in choosing the best personal loans for retired employees.
Debt Consolidation Plan in Singapore-
Debt consolidation is a strategic financial solution that consolidates a lender’s credit card. It helps in lowering the bill’s interest rates. In Singapore, a debt consolidation plan helps the customer to pay down their outstanding debts. This plan helps Singapore citizens avoid the increase in outstanding debts so that customers can bear the cancellation of any fees.
In the year 2017, banks’ association is announced in Singapore, especially for those facing difficulty in several high-interest debts. The name of the association is Credit Counselling Singapore (CSS). It raises credit scores of the citizens over long-term loans. It is mainly recommended to the lenders only when the debt exceeds 12 times their monthly salary. A customer can only pay outstanding balances like personal loans, overdrafts, etc. through this moneylender debt consolidation plan. A single liability can pay off the existing debts of a money lender.