Point to note when using a debt consolidation loan

The annual interest rate on credit card balances is more than 30%. If you have a large amount of credit card debts, consider repaying these debts with lower interest rate loans. This can help you to save on interest expenses and settle your debts earlier. There are many “debt consolidation loans” available on the market that are designed to help consumers pay off their credit card balances. As they are offered at different interest rates, you should review them carefully and choose a loan with a lower interest rate/handling fee. Only select loans offered by reputable financial institutions.

As for the repayment period, select a tenor that best fits with your financial circumstances and try to make it as short as possible because the longer the repayment period, the more the interest you will have to pay. Be sure to compare various options before coming to a decision. Compare using the annualised percentage rate.

A debt consolidation loan can help you consolidate all your credit card balances to help you save on interest expenses. It will not solve your debt problems, but it will make it easier and cheaper for you to pay it back. It is important that you keep any excessive spending habits in check to make sure you do not continue to accumulate credit card debts. A debt consolidation loan can be used to replace various higher interest rate loans. Instead of having multiple debt payments to track, you now only have one to manage. Be sure to check if there is an early repayment penalty for your other loans if you settle them before maturity. In general, the later you pay off the outstanding balance of an instalment loan, the less you can save on interest. In some cases, early repayment fee could mean paying more than your savings in interest. Consumers who intend to pay off an instalment loan before maturity should first approach the lending institution to check the unpaid principal amount, the early repayment fee and the amount of interest that could be saved. They should consider if the cost will outweigh the benefit. Learn more.