Can a Debt Consolidation Plan Refinance Help You Save Money?
Loans have become part of daily life for a good percentage of Singaporean citizens. In Q2 of 2025, household debt in Singapore, as part of the GDP, was around 53%, and according to a 2023 survey, no less than 28% of the working adults active in our country had unsecured debt in their name. Personal loans, educational financial aid packages, credit card debt, or even mortgages all contribute to the financial dynamics of our country and help us fulfill a significant chunk of our ambitions. But there is a problem. According to a survey published in 2022, no less than 19% of respondent declared they have issues in paying back their unsecured debt. Are you part of the growing number of Singaporeans who are finding it harder and harder to keep up with monthly payments? Are you looking for a way to reduce the total interest rate of your contracted credits and simplify your payments? In such a case, one of the best solutions available to your situation would be to focus your attention on a debt consolidation plan refinance. Debt consolidation loans are essentially personal financial aid packages that can be utilized to cover your existing debt and simplify your ongoing financial obligations into a singular monthly payment. The process is quite simple, and in some specific circumstances, the financial benefits will transform these credits into a win-win for both creditors and borrowers. Debt consolidation plan refinance is available to all borrowers who still enjoy a good credit
score and who want to stick to a repayment plan that will not have any unknown variables. Yes, not everyone can obtain them. But if you do qualify for one, DCLs can be one of the best solutions to put your financial situation back on track.
In What Scenario Do Debt Consolidation Loans Make Sense? Well, let’s imagine this situation. You currently have three years remaining of a personal loan totaling S$15,000, which has an interest rate of 10% per year and an associated monthly payment of no less than S$484. Likewise, like most Singaporeans let’s assume you pay off a credit card debt, with an outstanding amount of S$8,000, an annual interest rate of 25%, a 3year repayment term, and a minimum monthly contribution of S$320 to which you have added an education loan totaling S$12,000, with an annual interest rate of only 7%, but that has repayment tenure of 3 years and requires a monthly payment of $S371. In such a scenario, your monthly debt will come to S$1,175, and the total interest you will have to pay, at the end of the 3-year repayment tenure, will be S$7,300. It’s significant. But now let’s assume you obtained an advantageous debt consolidation plan refinance package that covers the S$35,000 required to pay off your existing debt and that comes with the same 3year repayment tenure, for an interest rate of 9% per year and an administration fee of 2% of the loan principal. The terms of debt consolidation loans will depend on many factors, including your credit score. But, with a DCL like this, your debt will be simplified to a single monthly payment of S$1,110, and the total interest rate associated with the loan, plus interest, will come to S$5,840. So, you will reduce your monthly payment by S$65, and also save S$1,460 in three years. It’s a winwin, and it’s also a way to significantly improve the long-term perspectives of your credit score.
What Documents Are Needed for Debt Consolidation Loans? In the eyes of the law, debt consolidation loans, even when provided by private lenders, are a type of personal financial aid package, and for this reason, their eligibility requirements will need to follow the framework supervised by the Monetary Authority of Singapore. Therefore, if you are interested in a debt consolidation plan refinance, the lender you’re applying to will require a copy of your NRIC, a couple of your recent payslips, your latest CPF contribution statement, and a couple of bank statements or payslips that attest to your status as a full-time worker. Have you been employed at your current workplace for less than three months? If so, you will also need to present a copy of your employment contract alongside, of course, proof of your residence. If you were applying for a simple personal loan, then this is where the paperwork requirements would have ended. But, for debt consolidation loans, the lender that reviews your application will also require proof of your existing debt and view your outstanding balances, so as to determine the amounts you need to consolidate. Everything goes well? Then, you will only need to sign the contract at your lender’s office, and the money will then be disbursed into your account, on the spot.
Is There a Limit to How Much You Can Obtain with a DCL? Yes, as is the case with unsecured personal loans, the maximum amounts you can borrow via a debt consolidation plan refinance will be tied to your current monthly wage and the TDSR
associated with your profile. For an unsecured loan, the maximum sum you can obtain with an annual wage that surpasses S$20,000 will be tied to six times your monthly wage. Do you want to obtain more than that? In that case, you will be required to present collateral. Likewise, even if it’s mostly used for mortgages, most lenders will refuse to provide you with a loan if your TDSR is above 55%. Do you currently have an annual wage of S$50,000 and your debt obligations total S$47,000, with a repayment term of 3 years? In that case, you will have a TDSR of 31%, which technically should make you eligible for a DCL as long as your credit score is decent. What is an acceptable credit score in Singapore? Anything between 1825 and 1843. Is your current rating below 1782? Then, in that case, you will likely be asked to back your application with collateral. DCLs are typically harder to obtain than regular personal loans. But if you do qualify for them, they can provide an opportunity for improving your current financial situation.
