Sometimes it happens that you are forced to take a loan to meet your unexpected expenditures. For example, if you have a loss in business, or a major car accident, some health issues or buying a new house, in such cases you need to borrow some money to meet your financial requirements.
Sometimes it helps a lot, but in some other cases, you might get into trouble if you get loans from different creditors and that is on high-interest rates.
In such cases, it becomes very difficult to keep track of every loan and to meet the deadlines. Then there will be a flood of phone calls, messages and reminders from different creditors as they wanted to get paid.
In such cases, people start thinking about consolidating their debt. Debt consolidation is a process to take a new loan that can be used to pay off all the previous loans and then dealing with only one long term and favorable loan. The favorable loan means you need to pay less interest rate and also you have to pay lower single monthly payment as compared to the combined payments you had to pay previously.
Debt consolidation is good for personal loan debts, student loan debts, credit card debt and many other types of debts.
There is another type of debt consolidation in which you don’t get another loan to pay the previous multiple payments. In this type of debt consolidation, you take the help of different debt consolidation companies.
You can find various approved debt consolidation companies Singapore from where you can get help in consolidating your debt. In this type of consolidation, the debt settlement company will negotiate with your creditors and will try to reduce your balance with small payments.
Once the company finalized your new reduced balance and payment plans, the creditors will close your account and you need to pay a new single amount each month to your debt settlement company and then this company will pay that amount to the creditors on your behalf.
In this type of debt consolidation, you don’t need to pay extra amount as we see in the first type where you take more loan to pay your previous loans. But there is also a disadvantage of such consolidation, the creditors may mark you as negative as you don’t pay the full amount that you owe.