Association of Banks in Singapore launched a new loan product to help consumers deal with their rising pile of debt: debt consolidation loan. Personal loans and credit card debt have been a growing problem for Singaporean consumers, and this could actually be a very helpful financial device to keep your personal finance in control. In contrast to a balance transfer loan, a debt consolidation loan helps you to pay down all of your personal debt over a long period of time. This is especially the case if you have racked up enough debt that will take you more than 12 months to full repay. Below, we discuss the best balance transfer offerings we've found in Singapore to help you find the best option to manage your debt.
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Our Top Picks for the Best Debt Consolidation Loans in Singapore
Below is our handpicked list of the best debt consolidation loans currently available in Singapore. Debt consolidation loans usually come with a one time processing fee and a flat interest rate, and can last anywhere between 1 to 10 years. By combining your high interest rate debt loans into one with a lower rate, you can take as much as 10 years to slowly manage your debt down to zero. Therefore, you should try to find an option with the lowest cost in form of fee and interest while finding a loan tenure that results in a manageable monthly payment.
Best Debt Consolidation Loan in Singapore: HSBC Debt Consolidation Plan
In our view, HSBC's debt consolidation loan is the best offering in the market because it offers the lowest interest rate, while also waiving its processing fee. For instance, for loan tenures of 1 to 7 years, it only charges a flat rate of 4.7%, compared to 5-6% being charged by other banks. For longer tenures of 8 to 10 years, its rates are still the cheapest at 5.9% vs +6% of competitors. Not only that, customers who apply online can receive S$100 in cashback as a welcome gift.
Details of HSBC Debt Consolidation Loan
|HSBC Debt Consolidation Loan||Details|
|Annual Fee||S$88 or 1%, waived|
|Flat Interest Rate 1-7 Years||4.7%|
|Flat Interest Rate 8-10 Years||5.9%|
|Balance to Income Limit||12x|
|Early Repayment Fee||3.9% of redemption amount|
|Late Payment Fee||2.5%+ prevailing interest on overdue amount|
|Promotion||S$100 cashback for online application + Annual fee waiver|
Other Debt Consolidation Plans You May Want to Consider
Because debt consolidation plans are relatively new, most banks are not advertising specific interest rates for these loans. Instead, they mostly show their "lowest possible rates" while still pricing rates differently for each borrower, depending on his risk profile. Therefore, we were not able to assess if other banks had definitely better offerings than the two offerings we mentioned above. However, a few below are worth mentioning because they advertise extremely low rates that one could possible get if they fit these banks' risk profiles.
CIMB Debt Consolidation Plan
In terms of the lowest interest rate being advertised, CIMB's debt consolidation plan was the lowest at 2.77%. Though it comes with a one time processing fee of 1%, CIMB is also providing a NTUC Fairprice voucher of S$80 for online customers. However, you should note that this rate is not guaranteed. CIMB's exact language is "interest rates are as low as 2.77%," and your approved interest rate will be determined based on your risk profile and may differ from the published rate. Still, it might be worth inquiring about their rate if you are not in a hurry.
Maybank Debt Consolidation Poan (DCP)
Another one that's worth mentioning is Maybank's debt consolidation loan. It is advertising rates "as low as 4.7%" for tenures 1 to 10 years. Since this is equal to HSBC's offering for 1-8 year loans.
Visual Comparison of Debt Consolidation Loans in Singapore
Below, we have prepared a visual comparison of the minimum effective interest rate you can get on a debt consolidation loan from each bank in Singapore. Remember, you may not get the some of these rates advertised by certain banks since not every bank guarantees their interest rates. For example, some banks advertise rates "as low as" a certain percent, while others promise you exact rates depending on the tenure of your loan. Therefore, if you choose to go with a bank of the first kind, you may end up receiving rates that are different from what you may have expected.
Summary Table of Best Debt Consolidation Loans in Singapore
In case you want a quick look at our picks, here are ValuePenguin's best debt consolidation loans for 2017.
|Processing Fee||Flat Rate||Tenure||Annual Income Requirement|
|HSBC Debt Consolidation Loan||S$88 or 1% (waived)||4.7%||1-7 Years||S$30,000 to S$119,999|
|HSBC Debt Consolidation Loan||S$88 or 1% (waived)||5.9%||8-10 Years||S$30,000 to S$119,999|
|UOB Debt Consolidation Loan||S$0||2.88% for 1 year, 7.88% for the 2nd-5th year||5 Years||S$30,000 to S$120,000|
|CIMB Debt Consolidation Loan||1%||As low as 2.77%%||1-8 Years||S$30,000 to S$120,000|
|Maybank Debt Consolidation Plan||S$0||As low as 4.7%||1-10 Years||S$30,000 to S$120,000|
|OCBC Debt Consolidation Loan||S$0||6%||1-8 Years||S$30,000 to S$120,000|
|Standard Chartered Consolidation Loan||S$199||4.98%||1-3 Years||S$30,000 to S$120,000|
|Standard Chartered Consolidation Loan||S$199||5.68%||4-7 Years||S$30,000 to S$120,000|
|Standard Chartered Consolidation Loan||S$199||6%||8 Years||S$30,000 to S$120,000|
|Standard Chartered Consolidation Loan||S$199||6.88%||9-10 Years||S$30,000 to S$120,000|