How Much Is Considered Too Much In Your Emergency Fund?

, ,

Most financial experts may have various views concerning financial matters. But, they will agree that saving up some cash for emergency needs. That it is an essential factor for healthy financial planning.

Many Singaporeans may get worried about not saving enough in the emergency funds. Different people may have various ideas regarding the amount. That is what would be considered to be enough to put away in emergency savings. It happens that what you may regard to be enough will not be sufficient to another.

This is each person has different financial plans and living standards. Some Singaporeans even wonder if it is a good idea to save a large amount. All towards the emergency savings since they might use for other ”better” things.

What Experts Advise

Many experts advise that you need to put aside some money. The amount needs to total 3-6 months of the monthly expenses. Yet, other experts advise you to save some dollars to help you get started.

From there on you can save about a year worth of your yearly income. You need to also look at other factors like how big your family is. Also, consider your living premises; whether rented or your own home. Look also at the car maintenance costs as well as your job security.

What Is Considered As Enough Or Too Much

There are different suggestions as to how much savings is enough or too much.The following tips will help you decide on the amount. This way you will know what amount is enough or is more than enough for your emergency savings:

The Emergency Savings is like Insurance Cover

The emergency savings are like an insurance. These help secure you in times of emergencies. Therefore, use the savings only if you have a crisis. The same way an insurance policy like the car insurance cover.

Just like an insurance, you only have to put away just enough. It needs to be sufficient to cover you in times of emergencies. This also avoids having your cash staying in the account earning nearly nothing. When you consider that a 3 months savings are adequate. Thus you do not need to save any more than that amount.

Disadvantages Of Over-Funding The Emergency Fund

Inability to Cover Other Financial Commitments

When you keep a lot of funds into the emergency savings. You will realize that you are not able to cover other important financial obligations. This can include settling your debts, saving for the children’s education. Additionally, it could be retirement saving and put down payment for your home.

The money can be a lot useful in doing these things rather than over-fund the emergency fund. Thus you do not need to put away more than is necessary. More so when you have more pressing debts to clear such as high-interest credit card. It is not advisable to purchase your necessities on credit. Yet you have savings in your account earning almost nothing in return.

Your Money Loses Value

Your emergency funds need to easy to access. Meaning you may only save with a moneylender institution where you can access it easily when in an emergency. It is an emergency saving and it should be accessible at any time and place.

Even then, It is advisable to pick a moneylender who will provide you higher interests on the savings. Interests on the emergency savings might not be above 1% per year. That means the interests on the savings is below the inflation rate. This will lead to you losing money to inflation.

When the average rate of inflation is higher than bank’s rates. Thus you will be losing money through your savings. This is because the worth of your savings is decreasing with time. Thus by saving up more saved on the emergency fund. Then you will end up losing more to inflation.

Consider other Options other than Overfunding your Emergency Savings

Reserving some money for emergencies will keep you from borrowing. That is from friends and relatives. It will also ensure that you do not get into debts. This could be by using credit facilities such as credit cards. Above all, it helps that you do not use some of your retirement savings.

Some retirement accounts can allow you to withdraw funds. This is often for settling medical bills with no penalty being charged. From this, you may also receive allowances for purchasing your first home. It is important that you keep in mind that money withdrawn does not earn interest. Even then, it may be better rather than get into high-interest debts in case of an emergency. This you may need to consider if you want to overfund the emergency account.

Realize that when you are no longer employed. By being unemployed reduces the benefit of the amount you may withdraw from the savings. That is provided you still are eligible.

Use The Emergency Savings to Help your Financial Plans

You might think that the bigger your emergency fund may be, the better for you. But, you need to realize that bigger savings on your emergency fund will likely be hurting your gains. You could consider the investment opportunities you may be missing as you save in the bank.

Even though different people may have different opinions and views. When it comes to the amount you need to save for an emergency fund. You may use the above tips to help determine the amount you need to have in the emergency fund. It will help not to overfund the emergency savings. Yet in the process miss out on good opportunities. The tips will help you ensure to achieve your financial plans without any strain.

This is important that you ensure that the emergency fund work. This is along your whole financial plan and never against it. A financial plan helps you cover your financial commitments on time. This can also help you invest wisely. This could be on high-return investments as you put aside small amounts for to your emergencies.

Tips & Tricks For Managing Your Student Loan Debt

, ,

Students loans are often times the worst thing to put off for later. Though they may seem rather harmless, however, realize that it is not always so. The student loans are possibly among the most financially destructive things. This is especially so to what a student can face in life. Even so, most students are not aware of the effects of these loans. It can happen that they are rather misinformed about the financial options available.

When not managed well, student loans might quickly accumulate in interests. Therefore, being proactive can be critical to effective loan management. Most students in Singapore have made use of several student loans. This has resulted in huge loan payments which might be overwhelming. By being aware of the risks involved in taking loans. It will help you lessen early exposure to unmanageable repayment agreements.

Even then, realize that excessive loans will negatively affect your credit ratings. They could increase rates of interest thus resulting in higher total costs. Meaning the ownership of important items like a home and a car purchase is higher. In helping you manage the repayment of your student debt.

Here are some tips advisable for current students, new graduates. This can also be useful to those struggling with repayment of their student loan.

Start Payments Immediately

When you can, you could consider making the payments immediately. Instead of waiting for the grace period to elapse. If you have a job, you could make some payment towards the student loan. In so doing, you will pay less in interest when you start making repayments immediately. Before you know it will become a routine.

When you are disciplined straight up. You soon will be way ahead of everyone else.also ensure you read through the agreement. This way you will also get to know the repayment plan. In reading through your school loans you will know the amount you owe. You also need to know the due dates of your payments, and the amount of the minimum payment. This will help you plan the amount to pay every month before signing it.

Know Your Options

There are many different loan types available in Singapore. Federally guaranteed loans normally allow for income-based, extended, or graduated payments. Also, each has its benefits.

Extended repayment let you stretch out your repayment to 25 years. The graduated repayments start out using low monthly payments. This then increases about every 2 years. This is a good option when you anticipate your income to increase too. The income-based payments depend on the combination of income, household size, and your personal loan balance. This can be good when your income is stable.

Certainly, any kind of plan that does not repay the loan fast is to be reconsidered. Then it can only result in bigger interests paid over during the personal loan tenure. Although taking more time to pay back a loan is not the best option. It is good to realize that any choice is better than defaulting on the set loan schedule. Not to mention missing payments. This might cause long-term damage to your finances which could actually have been prevented.

Consider Student Loan Consolidation

When you have not defaulted on the student loans. You could request your moneylender for a delay, or even deferment. This will mean that you will get exempted from a number of payments. Though the interests will accrue over this time. To be able to get this there are several qualifying conditions. This may include personal or medical problems. It can also be other reasons that you could document. This needs to prove the effect it will have on the ability to meet payments as set.

At times you might even qualify when you have already defaulted. However, in all cases, it is advisable to learn about the options available. This is before you require them. By knowing that you can move several personal loan repayments to later will make a major difference. Especially when you are planning for unforeseen financial emergencies. It could also be the inability to pay as agreed.

Have A Working Budget

It is important for you to know where your money is going to. Therefore, set a budget and you could ask for assistance to come up with one. This will help you look for areas that you can make savings. This will help you come up with extra cash which can be used for repayments.

To help with budgeting you use templates in Quickbooks and Excel. There are apps such as Mint, LearnVest, or Toshl can be useful for budget-setting.

Consolidate Loans When Possible, And Get Help If You Need It

In Singapore, there are some graduates who have many loans from different moneylenders. This might pose problems when the entire payments are unmanageable. When this happens, you could use the available programs for consolidating the student loan. Just confirm whether your student loan type qualifies for the for the consolidation programs. Even then, it is advisable that you talk to a moneylender.

Explain the situation, and certainly a solution for your specific need will be worked out. The one advantage of loan consolidation is lower payments. However, it can even offer a reduced or a set interest rate. Under some circumstances, it might offer you discounts for planning automatic payments.

Although some people will argue that thinking about these options. It could be preparing for failure. However, they are not considering the reality that life will not always work as planned. Getting prepared ahead of time will take less effort as compared to trying to repair problems in time of crisis. This could be the difference between getting overcome by the problem. Or you managing the problem.

Under all circumstance, ensure you are aware of the repayment options. Learn about these options even before deciding to make use of them. Above all look for ways to manage well, your student loans. This is before they become overwhelming.

How Do You Convince Your Moneylender

, ,

When you would like to borrow money, from a lender. You may need to persuade the lending institution to provide you with the personal loan. Loans may not always be easy to access. Especially, for a borrower who has a low credit score and other past issues.

Even so, taking time to carry out some research will help you find a lender. This lender will be ready to help you find a solution based on your situation. Actually, many moneylenders are willing to offer you the funds you need.

When you are in urgent need of funding. You could be considering borrowing money from moneylenders. Realize that the moneylenders have a business and a reputation to attend to. Therefore, they may not get fooled easily in using lies and made up stories.

Below are tips to help you persuade a lender to offer you the personal loan.

Clean Up Your Credit Rating

If you would like to take out a loan from licensed moneylenders. Often times you will, you will notice that they require that you have a steady job. It may be difficult to get low rates. Especially when you are not making your other payments.

Consider this, when you visit a bank or call them. The employees may express their concerns when you hold a low credit score. Owing to this, when seeking to take out a loan. You may have to grow your credit score. By repaying existing loans and handling any issues their report. A borrower is able to lower their interest rate as well as save a lot.

Tell Your Story

As you are talking with your moneylenders, you will need to persuade them. So as to actually prove that you genuinely need the funds you want to borrow. Thus it is advisable that you tell your story, however, ensure not to make it into a drama show. Moneylenders also have stories to share but choose not to. Although sharing your current situation is necessary. Making it to a sob-story to make your moneylender pity you. It may not be the best way to go.

When most money lenders are asked whether the stories moved them. Nearly all answered with a simple: “No.” Most think that these stories were rather exaggerated. Especially when borrowers and families start to cry.

Therefore, make things brief, share your story. However, do not make it dramatic and intense. It is all about proving that you truly need financial assistance. Thus avoid the emotional manipulation. There are many aspects that will be considered for you to qualify for the loan you need.

Provide Payslips

It is important as you are seeking personal loans. You may have to confirm that you make a decent salary. At times, when you are not employed, you could manage to bring in cash from other sources.

Regardless, when it comes to high-risk loan providers. It is advisable that you are able to show your income. In so doing, you will be able to quicken the process. However, you might get to enjoy better interests. When you demonstrate that you make a reliable salary and are responsible. The lender will certainly look for a way to help you meet your financial needs. You could prove your salaried status by providing your recent past three months payslips.

Down Payment

When you are looking for personal loans to meet your financial obligations. You may need to think of down payment. When you offer some down payment on your loan. You will be able to reduce your monthly instalments. This will also show your lender that you are serious about repaying your loan. Fortunately, most high-risk loan providers are ready to help. They have no problem offering money to borrowers who put in some down payment.

Be Open

Normally moneylenders ask a number of questions prior to approving the application. They use this as a way to tell apart the different types of borrowers. That is those who make up stories to gain favour from the moneylender yet there are the genuine borrowers.

Therefore, during an interview, be open and tell the truth. That is regardless of how unconvincing and silly it will sound. Realize that coming up with stories only leads the moneylender to not approve the request. For this reason, avoid making up stories. In this situation, this can work against you.

The moneylenders are experienced in asking questions that can expose you. More so when you are lying. They use questions that have been devised to may seem as though you are responding to different questions. Yet in reality, you are just going in circles until you provide contradicting answers. This is how the lender will find out whether you were lying to start with.

Spread The Word

When you have found a good moneylender, you can do them good too. You could refer them to anyone you know and your friends too. Such moneylenders are putting in efforts to help borrowers access funds that they required. The least a borrower who has benefited from these can do is spreading the word. This will make more clients go to them. This can help them in their business. In turn, it will help you receive an approval easier next time you need to take out a loan.

Additionally, as your moneylender is kind to you, it is only right that you also do the same. Even when you are annoyed with the questions. Keep in mind that they only are doing their job. Not being kind and scolding them might result in you getting banned with the moneylenders. This could also be to all the other moneylenders who are acquainted with the particular lender.

As you are seeking loans, you might have a hard time convincing some lenders to offer you money. Although true, when you are seeking moneylenders to lend you some money. You will eventually find the right deal.

Additionally, you may walk away satisfied with the sum you have saved. Fortunately, by following these tips, it will help you convince your potential lender to offer you a loan.

Why You Need To Keep An Eye On Your Credit Score

, ,

When your credit score is lower than you would like it to be, chances are such a score is as a result of some little financial mistake or even an oversight you may have made some time ago.

Not all people that have bad credit have a low credit score brought about by something they did. Though at times, other people’s unlawful activity may affect your credit rating. It is therefore advisable that you protect your credit rating to help prevent becoming a victim of fraudulent acts.

Any unexplained adjustments to your credit score may be signalling fraud, however, regular checks on your credit reports will help you prevent financial losses. Through the countless money scams taking place these days, it is better for you to be safe than be sorry. Being a victim of financial scam will not only cause immediate problems like a monetary loss, it could affect your credit rating as well, as a result creating long-lasting financial problems for you.

There are some tips that will assist in keeping you and your credit rating safe from online as well as financial predators:

Why Credit Rating Is Important

Once you have applied for an unsecured loan facility (a personal loan or a credit card) from the banks or an accredited moneylender in Singapore, always ensure to check that an update is carried out on your credit record by your money lender.

Since your credit report holds all sorts of helpful and important information – like the history of the missed payments, or even the likelihood of you being overleveraged, and certainly, the credit score. It plays a key part in determining if you will have your loan request approved for your moneylender personal loan or maybe the credit card you want.

Even if you do not want a loan at this time, a time may come when you will need some urgent cash, for example, to pay for wedding expenses, or to deal with medical emergencies. When it comes to credit cards, you could change your mind as soon as you realize that you will be saving a lot of money a year.

In addition, there are some specific professions (particularly in the finance industry or public service) that require their candidates to hold good credit scores and history. As a result, there are numerous reasons why you should ensure your credit history is in a good status.

However, there is one more way in which a person’s credit score is essential. And this is in most situations often disregarded. Since the data in your credit history changes every time there is a personal loan or a credit card loan request made using your names, the credit rating can also be used to alert you whenever you have become a victim of financial fraud or even other illegal activities.

What You Could Do To Protect Your Credit Rating

A malicious person or a fraudster is only able to affect your credit history when they can access it, generally through stealing your identity. For that reason, you need to always exercise good habits to help safeguard yourself.

Ensure that you always keep safe sensitive information like personal particulars, both online and offline. Make certain that you dispose of documents such as bank statements as well as bills appropriately (you can use a shredder when you would like to be double sure) and never share your personal data through unsafe channels (like during phone calls that are unverified, or over the net and also social media).

Always keep your account numbers as well as PIN numbers safe. Ensure you cover your PIN and account numbers every time you are using debit at a store. Do decline to give your PIN to anyone. Also, avoid noting down your account and PIN numbers simply because you do not know when such information might get to malicious people.

When applications for credit cards are sent to you in the mail, and they are “pre-approved”, tear up these applications and the enclosed letters before you discard them. This isn’t being paranoid. It’s taking caution since identity thieves at times go through garbage as they search hoping to find these forms. This way they will fill them out and thus steal your identity.

Do not buy items online from companies you don’t trust or even from a corporation that doesn’t have an encryption technology plus an excellent privacy policy

As earlier mentioned that your credit history can be an additional tool you could use to protect you against identity theft plus all the consequences that will arise from it. For instance, when you notice that your credit score has been downgraded for no apparent reason or when you notice that there are a number of requests for your credit record all of a sudden, or you might get marked for late repayment when you don’t hold any debt, then you are sure to know that something is amiss.

This is what you should do: confirm your credit history regularly for any inconsistencies, and make sure to report any mistrustful activities immediately. When you dispute any unwanted financial actions as soon as you notice them, you stand a chance of bringing to an end those illegal acts.

How The Singaporean Credit Bureau Can Assist In Keeping You Safe

You don’t have to fanatically check your credit history each week. But there lies the setback – it may be easy to forget checking your reports if we were the ones to do so ourselves. Life gets busy or even the task just slips our mind. It is for this reasons that the Credit Bureau (CBS) offers a monitoring service on your credit report. This service ensures that your records are untarnished by no one else and prevent identity theft.

  • Each time a lender updates a transaction on your credit history, you receive an email alert to this regard. It also alerts you when a loan request is made using your name.
  • By safeguarding your credit information and personal finance it makes it easy for you to access all your records from home, thus putting your mind at ease.
  • It ensures the uploaded information onto your file is correct thus managing your credit reputation


Are Money Lenders An Alternative To Bank Loans?

, ,

Taking out a personal loan from banks in Singapore can at times be rather difficult. This is because of a great deal of paperwork involved. In general, banks always check your credit records before they authorize your personal loan application. In addition, banks do not consider your monthly salary when they are looking into your personal loan application. You may consider taking out a loan from licensed moneylenders if you reside in Singapore.

These legal lenders are approved by Singapore’s Registry of Moneylenders. They are bound by set rules and regulations that allow them to do business following these regulations. The money lender’s registry decides on the limit of the amount to be loan out, the interests to be charged, as well as the fees a money lender can charge.

Therefore, the question is whether moneylenders are a suitable choice for bank loans. Let’s look at some facts.

Moneylenders Provide Small Loans

Given that your loan requirement is a few thousand Singaporean dollars, a licensed moneylender can assist you to access this amount. Based on the money lending restrictions put in place, a legal moneylender will only give you a loan totalling four times your yearly earnings.

Though, some of the money lenders will not give borrowers loans equaling the full amount. The lending restrictions put in place by the lender’s registry are aimed at protecting borrowers. And also it’s for regulating the fast-growing money lending industry in Singapore.

These money lenders will authorize a loan amount of about $10,000 given that your yearly earning is about $30,000. Therefore, when you are in search of smaller payday loans to help you buy a budget plane-ticket, getting your car repaired or some other lesser need, turning to a licensed moneylender is always a good choice.

This makes it easy for a borrower to have quick cash fast and within a short period. In taking the short-term payday loans you are able to meet your urgent financial obligations. And its payable in the next paycheck depending on the repayment period set.

When you are in need of a huge amount of loan to help with renovations of your home, taking out a loan from a money lender isn’t a good option. most of the time, many money lenders will not take the risk of lending significant payday loan amounts of like $20,000 and more because of the risks involved in the case a borrower defaults.

Speedy Loan Approval

Different from banks, most money lenders are quite fast when processing loan applications. When you take with you all the necessary documents, the loan will be approved in about 30 minutes by your money lender. In most cases, it will not take you over 45 minutes to have the ready money in hand after submitting your documents and application to your licensed money lender.

This is because money lenders are dedicated to helping their borrowers address their financial needs in the quickest way. Since money lenders have flexible rules than banks their loan approval process goes much faster thus taking a shorter time for you to access your loan money. This makes money lenders a better option for individuals who are in urgent need of quick cash and are unable to get the cash from banks.

Higher Interests Charged

Although the interest rates offered by moneylenders are on the higher side, there are these lenders that offer lower rates. Even though money lenders are still acting according to the registry rules, the rates charged by most moneylenders are higher than what banks would charge on loans. This may be a downside of taking out loans from money lenders. However, it is important that you consider the repayment conditions they are offering you with the loan you take.

To ensure that you get the best interest available in the market, be sure to make time to shop around comparing lenders. Always compare the different provisions and services the different moneylenders offer before you can settle for a particular money lender. This way you will be assured of getting the right lender who will help you meet your financial needs at suitable interest rates.

Forgiving Credit Rating Assessment

Many borrowers are worried that their credit score may affect the approval of their loan request approval. Even as moneylenders are usually more forgiving when checking a borrower’s credit rating, they are keen to who they extend a loan to. In most cases, banks are very strict when it comes to checking client’s credit history before approving their loan applications. When you have a low credit score, often times your bank will not offer you a loan, but most moneylenders will still let you do so.

Actually, there are some money lenders that give less weight to your credit score compared to banks. And they normally never deny a loan to individuals due to their poor credit scores. Since it may take you time to fix the poor credit score, taking out a loan from a legal money lender would be your best alternative when you are in urgent need of money. Nevertheless, money lenders could turn down your loan application should they find out you already have taken a loan from other money lenders.

This often makes money lenders a better choice since they are not very strict with a borrower’s credit score. As long as the borrower has proof of being able to repay the loan and has a steady source of income, they will be considered for a loan approval by moneylenders in Singapore.


Taking out personal loans from banks in Singapore is at times rather difficult. This is due to a great amount of paperwork involved. Whether moneylenders are a suitable choice for you compared to bank depends on the purpose of loan you are taking.

Moneylenders mostly focus on giving smaller loans, especially when you are in search of smaller payday loans. These lenders are also very fast when processing your loan applications. And also are usually more forgiving when checking a borrower’s credit rating. Even then, they are keen to who they extend a loan to.


Get A Loan With A High Debt-To-Income Ratio With A Moneylender

, ,

Moneylenders use the debt-to-income ratio as a way to measure an individual’s capability to manage their debt repayments and the payments made each month. This is meant to compare your debt amount you have with your overall income.

Having a good credit score may not guarantee that you will get a personal loan from a bank or other money lending institutions. Banks frequently reject loan applications from individuals whose debt-to-income percentage is high.

Therefore, what is the debt-to-income ratio and why is it so important to a potential borrower.

What Is Debt-To-Income Ratio – DTI

Debt-to-income ratio-DTI isn’t part of a borrower’s credit score. It is instead something that banks and moneylenders use to establish your ability to pay back the personal loan taken. When your debt-to-income percentage is high, bankers and moneylenders are likely to turn down your loan application. This is because a high DTI shows that a borrower has a lot of debt for the income they have. This for a lender means you may not be able to manage the repayment of the loans you take out.

DTI is calculated by dividing the total debt service payments for each month by the gross income for each month. The DTI is often expressed using percentages. When you have a debt-to-income ratio of 36% and above, then it means your DTI is high. And the likelihood of your money lender approving your loan application is significantly reduced.

Therefore, you have to work at lowering your debt-to-income ratio ahead of applying for a payday loan. Below are some useful strategies that will help you notably decrease your DTI percentage.

Debt Settlement Plan

When your debt amount is above $10,000, you need to consider debt settlement as a key option for you to decrease the high debt-to-income percentage. When you take on a debt settlement plan, you will be able to give a lump sum of money to your lender. This way you are able to reduce the actual payday loan amount you owe.

This will also contribute positively to reducing your DTI ratio hence giving potential money lenders confidence in your ability to repay the loan taken thus making them approve your loan applications fast and with ease.

Change Repayment Terms

In order for you to reduce your debt payments for each month, you may do so either by consolidating your debt or in extending your debt repayment plan you had set with your money lender. Having a one-year debt repayment plan will more likely increase your debt repayment instalments for each month. On the other hand, a 5-year repayment program will greatly reduce your debt repayment instalment for each month.

Even with this new debt repayment plan, it is important for you to realize that by extending the repayment period you will pay more money in the end. But on the bright side, it will do away with any financial strains and stress when repaying your debts thus ensure you make your monthly instalments with ease.

Transfer Your Debt Balance 

In the debt transfer plan, you are able to get yourself a credit card which will help you pay one of the smaller debts you owe using the cash advance option. Despite the fact that the amount you owe stays the same, your debt instilment for each month are greatly reduced after you have closed one instalment account.

Increase Your Income

In order for you to increase your monthly income, you may consider taking a side job. There are many job offers in Singapore today, therefore, do a good such for a job that will not affect your usual 8-5 job schedule. Any employment that increases your income for each month will positively help you do away with your debt easy and fast. It will also help reduce your debt-to-income percentage of your personal finance.

Asking for a pay rise will also increase your income level and it’s also t easier to do. You may also consider turning your hobby into a business, this way you are able to bring in more money. The goal is to offset all your urgent debt you owe and in turn, reduce your DTI ratio.

Finding Places That Offer Loans To individuals With High DTI Ratio

Most licensed moneylenders in Singapore are known to offer personal loans even to people whose debt-to-income ratio is on the higher side. Though, you should have a reasonably good credit score.

All the Legal lenders in Singapore are under the Registry of Lender’s authority. This means they are expected to manage their money lending businesses in accordance with the laws and rules put in place by the registry.

In general, the Lender’s Registry decides on some aspects of the money lending regulations such as the maximum loan amount to be offered, fees to be charged, and the rates of interest the money lender can charge on any loan.

The interests charged by the licensed money lender are higher compared to those by banks. When you have all the proper documentation, your licensed money lender will more likely process your loan application a lot faster and in a short amount of time. There are some money lenders who may do some background checks on you for them to assess the lending risk involved.

When you have recently taken a loan from another money lender, they may not approve your loan application. Even then, most licensed money lenders available in Singapore do approve your loan application. Provided it doesn’t increase your debt for each month to above a specified threshold.


Debt-to-income ratio-DTI is not part of your credit score. It is instead a ratio that banks and moneylenders use to establish your ability to pay back the loan taken. To ensure you qualify for loans easily, there are useful strategies that will help you greatly decrease your DTI percentage.

One is increasing your income either by taking a second job or asking for a pay raise. Payment of lump sum to your debtors will also affect your debt ration positively. And the transfer of debt balance will also help reduce your instalment accounts to less more manageable ones hence strengthening your DTI.

What Is A Debt Consolidation Plan And How Does It Work In Singapore

The guide gives an explanation on everything you need to be familiar with regarding debt consolidation in Singapore. The guide further gives how the debt consolidation loan Singapore will help you repay multiple unsecured loan debts.

It is challenging for an individual to keep up with behind schedule payments on a particular credit card. It even gets worse when you find yourself deeper in debt with a number of creditors. A borrower will have very many payments and due dates to keep up with and the continuous constant reminder about the pending balance simply add further to the pressure. The further behind you are in the payments the larger your loan debt becomes.

Under such not so easy conditions, Singaporean debt consolidation plans will be of assistance for a borrower to getting the much-needed solution.

What A Debt Consolidation Plan Is

A debt consolidation plan is a debt management tool which was announced on the 17th January 2017 by the Association of Banks in Singapore (ABS). This plan was designed purposely for Permanent residents in Singapore and Singaporeans who were juggling a number of high-interest rate unsecured loan debts. These borrowers were also having difficulties meeting the monthly payments.

As the name suggests, a Debt Consolidation Plan allows a borrower to put together all credit cards debts they have and personal loans into one loan which comes with lower rates of interest. The new consolidated loan is afterwards to be repaid in regular monthly contributions. The debt consolidation loan Singapore, like a personal monthly instalment loan, runs for a time of up to ten years.

Debt Consolidation Plan is intended for unsecured loan facilities like personal loans, credit lines, and credit cards. On the other hand, there are specific types of unsecured loans that do not qualify to be consolidated. These loan types include renovation loans, education loans, credit services for business ventures and joint accounts.

How A Debt Consolidation Plan Works

Let’s use the case of Luke, who has a salary of S$4,000 and presently has an outstanding loan balance of S$36,000 between 3 credit cards and one personal loan all from different banking institutions.


Luke is hardly able to make the minimum repayments, which totals S$1,250 each month- this is almost half his earning for each month.

At the given rate, Luke is paying about S$8,549 in interest fees alone each year. Since the interest on the credit card loan compounds onto the outstanding balance, he is going to take a rather long time till he repays the debts completely.

A DCP will merge all the unsecured loans into one loan. In effect, the bank offering the DCP will be buying out Luke’s remaining balances and fees and other charges payable from the loan and credit cards. This is regardless whether they are from different banks. The accounts will thereof be closed or suspended temporarily.

Luke will now need to make payments to the bank offering the DCP until the debt is fully repaid. Assuming Luke is able to access a DCP from HSBC payable in over 8 years, and an interest of 10% per year. Below is how much he will be contributing each month, compared to the current commitments.


Through a DCP, Luke will only need to pay S$300 each month for his consolidated debts. When he can make monthly payments on time, he will be free from all the loans in 8 years and be able to save thousands of dollars based on the interest rates applied.

How Much You Can Borrow From The Debt Consolidation Plan

In general, banks allow an individual to borrow a Debt Consolidation Plan that is equal to the sum total of the outstanding balance they owe. This includes any fees and charges that the debt loan may have accrued as shown in the borrower’s accounts statement.

There are situations when your accepted DCP loan amount is not enough to cover all your outstanding debt balances. When this happens, you will then be responsible for the reimbursement of the pending balance directly to the institution you took the loan from.

The first Debt Consolidation Plan you get will make available an allowance of extra 5% on top of the sum total of Debt Consolidation Plan. This will contribute positively to your being able to handle incidental charges. The charges may have been incurred from the moment your Debt Consolidation Plan was authorized until the moment you repay back the Debt Consolidation Plan loan amount. A 5% allowance is provided and paid directly to the institutions you have taken loans from, and it is not deposited into your current or savings account. Should there be a sum of money left over from the allowance of 5%, the surplus amount is then credited or refunded back to you.

A number of financial institutions offer further complimentary services aimed at helping you make payments regardless of unforeseen events. For example, the Debt Consolidation Plan from Citibank provides free insurance which is intended to guarantee the repayment of the outstanding debt loan amounting to S$160,000. The insurance is applicable should the borrower suffer complete permanent disablement or an accidental death. The insurance will also come in handy in covering the minimum repayment amount owed each month for a period of up to six months. This applies in case you get retrenched or you unintentionally lose your job.

How You Can Get A Debt Consolidation Plan In Singapore

Debt consolidation loan Singapore is only made available to Singapore citizens or Permanent Residents.

In order for you to qualify for a Debt Consolidation loan Plan; you need to be salaried with a yearly take home of an amount from $30,000 to S$120,000. You also need to have outstanding loan balances which are interest- bearing on the unsecured credit services totalling a minimum 12 times the salary you earn each month.

You are also allowed to have only one active Debt Consolidation Plan at any given moment. After the first three months, you can then refinance the existing Debt Consolidation Plan by taking a second DCP from a participating financial institution. This is convenient for you when you find a financial institution that offers lower rates of interest in the market.

It is also essential to take note that when you enrol in an active Debt Consolidation Plan; you are not allowed to make an application for a new loan or a credit card. This you can access once your outstanding loan debt is lower than eight times your salary for each month. This is aimed at keeping you focused on paying up your outstanding debts.

Where You Can Obtain The Debt Consolidation Plan In Singapore

The debt consolidations plans are at present accessible at 14 financial institutions that are taking part in Singapore. These financial institutions include ANZ; CIMB; HSBC; Bank of China; Citibank; DBS; Industrial and Commercial Bank of China; Maybank; Standard Chartered, UOB, American Express and OCBC.

You are able to apply for a Debt Consolidation Plan from the financial institution of your picking. This is possible even when you do not have an account with them as yet. It is essential to take note that each of the financial institutions has its own conditions, provisions and interest rates for the Debt Consolidation Plan they offer to borrowers. It is proposed for potential borrowers to compare the plans offered before deciding on a particular financial institution of choice. This will ensure that you are signing a repayment plan and ideal rates of interest that addresses your financial position.

Before you can apply for a Debt Consolidation Plan, ensure you have the below-listed documents ready:

  • You need to have the most current report on your credit status
  • You will be required to have the most recent income documents
  • You need to have a copy of your valid identification card (both copies of the front and back)
  • You should also have the most current unsecured loan and credit card statements
  • Ensure you have a confirmation letter showing all the unbilled balances of the unsecured credit card loans and the instalments repayment plans.

Above all, a debt consolidation plan is a very convenient and useful tool for handling multiple high-interest rate debts that you may owe. When you have a number of personal loans and credit card bills, a Debt Consolidation Plan will be helpful in repaying these debts off. This will leave you with only one payment for each month, therefore, saving you lots of money with the lower rates of interest charged.


<<< Back to Loan Advisor Home Page

5 Money Lessons You Should Learn Before You Graduate

The earlier you start learning about how to handle your money matters, the more wisdom you gain. It is always good to be money-wise to avoid future crisis. And if a debt is accumulated, you will know that you need to jump in quickly and take rectifying actions in order not to let matters escalate out of hand.

Students should aim to clear their student loans before graduation because graduation might seem to be the end, but it is the beginning of every graduate’s chapter. Equip your minds with these insightful financial concepts and lessons before you enter the workforce.

#1 Save And Fund

Saving is not only for people with stable jobs; it can also be for students who receive allowances and work in different part-time jobs. No matter how big or small your daily savings is; it is still part of the whole that you will have later on.

The emergency fund is a reserve amount that can only be used during a crisis. So, you do not need to borrow any amount from other people, especially your parents. On the plus side, it does not have any interest because it is your own fund.

Students who initiate to save and freelance, are more likely to earn and sustain even during an emergency like economy downturn or unemployment.

#2 Discounts Is For The Wise

Department stores and big malls flash a lot of sales promotions featuring discounted items that entice students like you to spend. You wouldn’t appreciate a newly discounted wine, when you don’t even know its value in regular price. You end up buying the bulk of soaps and detergent and store them somewhere in the house when you have a surplus.

Therefore, a discount is only for good if you really need the item. Do not get fascinated by sales; otherwise, you’ll end up wasting money on non-beneficial products.

#3 Invest In Small Business As Starter

Money should be profitable and not stagnant. To earn and let your money grow, try investing in small business or deposit your money in a bank with high interest for it to grow. You can also invest something on your passion and enhance it to be gainful. This is not an assurance of a big income, but it is perfect for a start.

#4 Think Ahead About Future Expenses And Income

As a student, it is normal to think about projects, deadlines, exams, and grades. But, when you step forward to the real working world, those problems you have right now will be in the past.

To prepare yourself for the future professional life, it is better to start listing and calculating possible expenses that you need to prepare yourself. It can be a new wardrobe, car and others. Bear in mind that you will try to conquer the workforce without incurring new debts.

#5 Do Not Spend More Than What You Gain

Outside the four walls of the classroom is the real world with delightful and tempting materials. The branded clothes, latest gadgets, trending cosmetics are only a few of those things you might want to have as soon as you land in your first stable job. Keep in mind to spend lesser than what you have earned to avoid financial difficulties.

With these 5 lessons in mind, always be aware of your expenditure and there are always apps that you can make use of to track your spending. Give yourself an awesome first step into the real world!


<<< Back to Loan Advisor