5 Debt Consolidation Tips and Traps to Avoid

Debt consolidation loans have been quite in demand for few years. With the increase in credit card debts, people have started using debt consolidation loans to improve their credit scores for the long run. This trend has been seen more in megacities like Singapore as compared to small towns all around the sphere.

There are many money lenders which provide different types of business loans in Singapore, and debt consolidation is one of those. When approaching these money lenders for business loans in Singapore, the borrowers need to be well informed about the tips and traps associated with the debt consolidation loan.

When going for a business loan in Singapore for ensuring debt consolidation and improvement of credit score, one must follow the under-mentioned tips:

  • Always research any lender or offer for taking debt consolidation loans. There are many scams and fraud companies in the market that lure the borrowers with their attractive offers, ask for deposits before the completion of the whole procedure, and then vanish.
  • The debt consolidation loan should not be too expensive for the borrower, therefore he or she should do proper calculations before going for one. It might be the case for many borrowers that their current instalments are comparatively manageable as compared to the debt consolidation loan they are planning for.
  • Avoid debt consolidation programs with repayment penalties, therefore one should read the clauses associated with the loan before signing anywhere.
  • Don’t fall for consolidating every debt, always properly analyze, take financial advice from experts and then consolidate any debt.
  • Never pay all your debts without saving something at the last, always have some money saved for an emergency.

There are some traps that need caution on the part of the borrower when going for business loans in Singapore specifically for debt consolidation:

  • The debt statement should be reviewed accurately.
  • A zero-interest balance transfer option should be enquired about.
  • Negotiate with the lender for manageable interest rates.
  • Snowball effect to get rid of small debt first and then move to larger ones.
  • Organize the debt efficiently, do not borrow more rather cut down expenses.

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