Factors You Should Consider With Debt Consolidation Loans

Factors You Should Consider With Debt Consolidation Loans

Singapore is a country governed by the rule of law. Before submitting to any lender, ensure that they abide by the rules and regulations set out by the Ministry of Law, otherwise, you will find yourself paying loans with exorbitant interest rates. When selecting the most suitable debt consolidation loan in Singapore, here are some of the factors you should consider.

1. Transparency

It is the responsibility of every lender to offer total transparency to their borrowers. All the terms and conditions should be open for the borrower to see from the onset. The lender should be ready to answer all types of questions, honestly. Also, lending companies should provide a platform where customers can review the loan packages offered by the consolidated bank. If by any chance, your questions are not being answered to your satisfaction, you should move on to the next lender.

2. Ministry of Law

After picking out your most preferred moneylender, visit the website of Singapore’s Ministry of Law to find out if the moneylender is licensed. It is the only platform where you will find the full list of licensed moneylenders in Singapore. The policy of the Ministry of Law demands that all private moneylenders should register with and be licensed by the ministry before commencing operations. Therefore, a moneylender that is not listed is a fraud.

3. Loan Amount

Monthly incomes largely dictate the lending guidelines that are followed by most money lenders. In such cases, licensed money lenders in Singapore allow you to take only a loan amount that your income allows. If the lender is willing to give you credit that is way above your income, then there is a possibility that you are dealing with a loan shark.

4. Interest Rates

The Ministry of Law has set out a stringent guideline that no lender should charge an interest exceeding 4% of the monthly principal for personal loans. Therefore, no lender is allowed to set their interest rates too high. Loan sharks charge interest rates of up to 40% of the principal, which is unacceptable by any standards.

5. Loan Contract

Before committing to any loan contract, ensure the following details are indicated.

  • The amount of money you intend to borrow
  • The interest rate per the agreed period
  • The repayment period
  • Available repayment options
  • Charges, including the possible penalties

6. Fees

The law states the types of fees that moneylenders are allowed to charge. On top of interest, there are three types of fees that can be charged by moneylenders. They are the loan processing fee, legal fee, and the late payment fee. For late payments, the law allows moneylenders to charge a monthly fee not exceeding $60.


To receive a debt consolidation loan in Singapore, some factors to consider include proof of citizenship or permanent residency for non-citizens, proof of income, and employment for Singapore citizens. For non-citizens, you are required to provide a work permit and valid income. If, by chance, you qualify, upon doing so, you will automatically be able to access your credit score. Through a credit score, you will have access to a loan that is tailored to your needs.


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