Getting tangled up in a complex debt web is not uncommon. From unforeseen urgencies to simple financial mismanagement, eclectic scenarios can lead to such monetary pitfalls. You can untangle yourself from an intricate entrapment, and one solution often bandied around is a debt consolidation loan licensed moneylender in Singapore.
A debt consolidation loan simplifies your multiple debt payments into a single loan, permitting you to handle your repayments much better. Nevertheless, obtaining such a loan is not an ensured success and often depends on several critical factors.
So, here are the infallible methods to evade rejection from getting a debt consolidation loan from a licensed money lender in Singapore.
Monetary Health Matters
In the lending world, monetary health is similar to your heartbeat – it’s one of the first things money lenders will mainly check when taking personal loans and other loan products. When applying for a debt consolidation loan licensed moneylender in Singapore, they’ll look at your financial health to gauge your capability to repay the loan.
Here are the factors that signify solid financial health:
- Savings: It’s the money you set aside from your earnings. A healthy savings account demonstrates monetary discipline, which is attractive to lenders.
- Spending: Your spending habits reflect your monetary behavior. Controlled spending indicates financial literacy and maturity.
- Budgeting: A structured budget shows that you are organized with your finances and that you live within your means.
Grasping and demonstrating these elements of monetary health are critical to improving your chances of loan approval. However, it doesn’t stop there. Your credit history also plays an influential role in your application.
Noteworthy Role of Credit History for Debt Consolidation Loan Licensed Moneylender
Consider your credit history as your monetary report card, which Singapore’s legal money lenders pay much attention to. Each time you borrow money, be it through a credit card or a loan, and every time you pay it back, it gets recorded in your credit history.
Here’s why it’s noteworthy:
Credit Score
These numbers determine the likelihood of repaying your debts. The Moneylenders Credit Bureau is your source to obtain your credit score background. You’ll find the numbers the Credit Bureau Singapore (CBS) assigns such scores.
| CBS Credit Score | Probability of Default | Risk Grade |
| 1911 – 2000 | 0.27% – 0.88% | AA |
| 1844 – 1910 | 0.91% – 1.75% | BB |
| 1825 – 1843 | 1.86% – 3.48% | CC |
| 1813 – 1824 | 3.58% – 6.20% | DD |
| 1782 – 1812 | 6.39% – 10.0% | EE |
| 1755 – 1781 | 10.35% – 15.03% | FF |
| 1000 – 1754 | More than 15.12% | GG-HH |
The CBS credit score has these digits ranging from 1000 (high risk) to 2000 (low risk), which every borrower may have etched in their history. A credit score closer to 2000 increases your chances of loan approval.
Credit History
Applying for a debt consolidation loan licensed moneylender requires a credit report encompassing your credit history. The Moneylenders Credit Bureau (MLCB) details your past and current loan information.
A typical credit report contains:
| Component | Descriptions |
| Personal Information | It indicates your basic details, including name and identification. .number |
| Credit Summary | Overview of active and past credit facilities. |
| Credit Facilities | Details of credit facilities borrowed from licensed moneylenders. |
| Default Records | Records of any loan defaults. |
| Inquiry Records | Records of entities that have made inquiries about your creditworthiness, which could affect your credit score. |
Knowing and enhancing your credit history can significantly assist you in avoiding rejection. Nevertheless, it’s only a piece of the puzzle. Next up is your debt-to-income ratio.
Debt Consolidation Loan Licensed Moneylender and The Relevance of Your DTI Ratio
Think of your Debt-to-Income (DTI) ratio as the monetary scale money lenders use to weigh your debts against your earnings. When assessing your capability to handle monthly payments, it’s a key figure lenders look at.
Here’s a simple formula to calculate your DTI ratio:
‘DTI ratio = (Total of your monthly debt payments/your gross monthly income) x 100’
In Singapore, a DTI ratio of 55% or less is preferred by most licensed money lenders, which means that not more than half of your income should be dedicated to debt repayments.
To illustrate:
| Total Monthly Debt Payments | SGD 2000 |
| Gross Monthly Income | SGD 5000 |
| DTI Ratio (2000/5000 * 100) | 40% |
In this model, 40% of the borrower’s income goes into repaying debts, an acceptable rate for many legal lenders in Singapore.
The Significance of Stable Employment to Access Debt Consolidation Loan Licensed Moneylender
Comparable to a well-anchored ship during a storm, stable employment gives licensed money lenders the assurance they need about your monetary reliability. It’s no secret that a consistent income is vital for servicing a debt consolidation loan licensed moneylender, and lenders want to see that you’re on solid employment ground.
Here’s what lenders seek:
- Job Stability: Frequently changing jobs may raise red flags about your monetary stability. Typically, being in the same position or industry for over a year reflects favorably on your application.
- Income Consistency: Lenders prefer a steady, regular income, confirming that you can meet the repayment timetable.
Now that you understand the significance of stable employment, it’s time to check the subsequent crucial truth – your repayment plan.
Your Plan for Repayment
A compelling repayment plan is like a road map showing precisely how you will reach your destination – in this case, being debt-free.
Here’s what your repayment program should address:
- Timeline: This includes your loan tenure and when you intend to finish paying back the loan.
- Payment Amount: It’s how much you’ll repay monthly. It should be a figure that you can comfortably afford while permitting savings and other monetary commitments.
- Back-up Plan: It outlines how you plan to meet your commitments in case of unplanned occurrences like job loss or medical emergencies.
An effective repayment plan clearly shows your intentions, reinforcing the lender’s confidence in your commitment to repay the loan. Next, it’s the perfect moment to discuss the sixth method- proper paperwork and documentation.
Proper Debt Consolidation Loan Licensed Moneylender Paperwork and Documentation
Documents are the backbone of your loan application. They provide lenders with proof of your monetary standing. It is crucial to have your documents in order and confirm they accurately reflect your financial status.
Here’s a list of documents you typically require:
- Identification Verification: It includes your NRIC or passport.
- Proof of Income: CPF contribution history, payslips, tax assessment notice, etc.
- Credit Report: Delivers a snapshot of your credit history.
- Details of All Outstanding Debts: These could include credit card bills, other loans, particularly unsecured loans, etc.
Now that you can prepare your paperwork, it’s time to move to the following realities you must complete to ensure the debt consolidation loan licensed moneylender is accessible – the danger of existing loan defaults.
The Danger of Existing Loan Defaults
Existing loan defaults are to licensed money lenders what sharks are to swimmers – they incite fear. Default on your credit history would undoubtedly demonstrate monetary unreliability, making lenders hesitate to offer you a loan.
Ponder these points:
- Track Record: Persisting defaults leave an annoying stain on your credit history that’s hard to clean. It’s crucial to supervise such current debts responsibly before applying for a new one.
- Prompt Payments: A history of timely payments goes a long way in establishing your creditworthiness.
In the splendid outline of loan approval, the absence of loan defaults is one of the strongest assurances you can give to your potential lender.
A Co- signer’s Creditworthiness
Borrowing money is like a trust relay race, where the co-signer could be the teammate that helps you cross the finish line. A co-signer can remarkably boost your chances of loan approval, but creditworthiness is another factor you should always pay attention to.
Here’s why:
- Backup Repayer: Lenders deem A co-signer a guarantee. If you fail to make repayments, the responsibility falls on them, reducing the lender’s risk.
- Credit Score Matters: The co-signers credit score and history should be excellent to bolster your application.
Remember, a co-signer is more than a backup repayer – they’re your monetary teammate in this relay. Their creditworthiness can be the difference between acceptance and rejection.
A Note to Remember: Avoiding Loan Sharks
While the desperation to consolidate debt might lead some toward loan sharks, remember they’re unreliable sources for debt consolidation loans. The unpredictability, high-interest rates, and unregulated lending practices can drive you further into debt.
Always opt for licensed money lenders regulated under Singapore’s Moneylenders Act.
Truths and Successful Access to Debt Consolidation Loan Licensed Moneylender
You can triumphantly pursue the debt consolidation loan licensed moneylender application process; it’s vital to acknowledge and act upon the enumerated truths. By doing so, you’ll not only enhance your chances of approval but also get one step closer to monetary freedom. Comprehending these truths is only half the battle – the real victory lies in using them efficiently.
So, get started on your expedition toward monetary stability. Evaluate your situation, prepare your paperwork, be truthful, and remember, you’re not alone in this.
If you require professional and skilled advice on going through your debt consolidation process or have any further questions, don’t waver to reach out. Our Accredit Licensed Money Lender team is always ready to assist and guide you toward a financially secure future.
Take control of your financial health today – because the power to change your situation is always in your hands.
