Managing multiple debts is not uncommon these days. From mortgages to credit card loans, most modern individuals take up loans to attain milestones that improve their life. However, there may be a time when doing so no longer becomes feasible due to any number of reasons. Thankfully, debt consolidation loans are available to consolidate these multiple loans into a single one. Paying off one loan instead of many is arguably much more strategic and less complicated, but it has to be executed properly in order to be effective. To ensure you get the most out of debt consolidation, take note of these three common mistakes to avoid before applying for one.
1. Avoiding debt consolidation in the first place
Individuals with bad credit commonly mistake debt consolidation for being unfeasible due to their circumstances. While it may be challenging to find a licensed money lender that is willing to extend your credit despite your credentials showing you are likely to default, there will always be a financial option available to you. And while these may come with a higher interest rate than usual, they are far better than dealing with multiple loans whose interest rates combined are likely to be much higher than a single debt consolidation loan.
2. Neglecting credit counselling
It should be noted that pursuing debt consolidation must always be done with expert advice. Before applying for the loan, it is vital to establish a clear debt repayment plan and have a deeper understanding of all your available options to make an informed decision. Otherwise, you may find yourself in deeper financial trouble than before. Credit counselling helps in achieving all this, as well as supporting you in other matters like cooperating with your lenders and breaking your bad habits to prevent further cycles of indebtedness. Moreover, getting counselling lets you pick up various best practices regarding debt consolidation.
3. Not verifying a financial institution in the Money Lender Registry
It goes without saying that you should only take debt consolidation from Singapore-approved debt consolidation companies and money lenders included in the Money Lender Registry. Falling prey to unlicensed financial institutions, also known as loan sharks, will typically result in further financial troubles due to their abusive behaviour and non-compliance with the government’s rules around money lending. Thus, to avoid being trapped in a vicious cycle of spiralling debts through loan shark harassment, it is recommended that you only seek the help of a trusted, licensed money lender in Singapore.
Debt consolidation is an effective strategy that helps borrowers become debt-free, provided it is done right. Although it consolidates many loans into one, it only means there is much less hassle in paying off one’s dues, but it still requires borrowers to become more financially responsible to repay all their debt. As such, getting credit counselling and expert advice is imperative in ensuring that their debt consolidation strategy is used to its full advantage.
If you ever find yourself in need of financial assistance, you can always think about turning to legal and reputable money lenders like Orange Credit for aid. As a licensed Geylang money lender and debt consolidation company, we offer a variety of flexible, quick, and easy loans in Singapore that suit your needs. To find out more about our services, contact us today!