Loans

Best Debt Consolidation Plans 2017

Personal loans and credit card debt have been a growing problem for Singaporean consumers, and debt consolidation loan 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 valuable if you have racked up enough debt that will take you more than 12 months to full repay. Below is our handpicked list of the best debt consolidation loans currently available in Singapore.

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Our Top Picks for the Best Debt Consolidation Loans 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 loans into one with a lower rate, you can mange your debt down to zero over a long period of time. The key is to minimise the interest and fee while controlling the loan tenure to keep your monthly payment at a reasonable level. However, you should be careful with some banks that advertise rates "as low as X%", because you may end up receiving rates that are different from what you may have expected.

This graph compares the effective interest rates of the best debt consolidation loan offer from each bank in Singapore

Best Debt Consolidation Plan 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 LoanDetails
Annual FeeS$88 or 1%, waived
Flat Interest Rate 1-7 Years4.7%
Flat Interest Rate 8-10 Years5.9%
Balance to Income Limit12x
Early Repayment Fee3.9% of redemption amount
Late Payment Fee2.5%+ prevailing interest on overdue amount
PromotionS$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.

DBS & POSB Debt Consolidation Plan (DCP)

Another one that's worth mentioning is DBS's debt consolidation loan. It is advertising rates "as low as 4.58%" for tenures up to 8 years. This can actually work out well for some who can manage to secure these rates. However, since the wording is "as low as" 4.58%, you could actually end up paying an interest that is much higher. Also, DBS charges a processing fee of S$99, which can inflate your final cost.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
DBS DCPS$99As low as 4.58%8.22%1-8 YearsS$30,000 to S$120,000

Maybank Debt Consolidation Plan (DCP)

Last debt consolidation plan that should be showcased 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. However, you should also be ware that this wording is ambiguous and you could end up with a higher cost in reality.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
Maybank DCPS$0As low as 4.7%8.48%1-10 YearsS$30,000 to S$120,000

CIMB Consolidation Plan

In terms of the lowest interest rate being advertised, CIMB's debt consolidation plan was the lowest at 2.77%, but unlike HSBC it charges a one time processing fee of 1%. Not only that, 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 can be materially higher than the published rate depending on your credit score.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
CIMB DCP1%As low as 2.77%%7%1-8 YearsS$30,000 to S$120,000

Other Debt Consolidation Plans That We Considered

Besides the options that we mentioned above, we've considered all the debt consolidation plans offered by all major banks in Singapore. These include banks like Bank of China, Citibank, DBS, POSB, OCBC, Standard Chartered and UOB. Perhaps this is a relatively young and premature product, however, as many banks didn't provide specifics of their offerings for someone to be able to compare them properly. Below we do our utmost best to try and compare their offerings.

Standard Chartered actually shows a lot of details on their site, including their pricing. With S$199 of joining fee and fixed rate ranging from 4.98% to 6.88%, however, it seems less competitive to HSBC's offering.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
Standard Chartered Consolidation LoanS$1994.98%9.55%1-3 YearsS$30,000 to S$120,000
5.68%10.64%-10.20%4-7 Years
6%10.57%8 Years
6.88%11.77%-11.61%9-10 Years

UOB and OCBC seem to charge an interest rate of 6%, which is higher than HSBC's rates though they all don't seem to charge a processing or joining fee. While UOB does offer a promotional rate for the 5 year tenure, our calculation actually showed that HSBC's offering is still more competitive in terms of total cost to the borrower. Lastly, Citibank doesn't list its processing fee or interest rate, though its web page does mention a possible effective interest rate of 10.5%, which is higher than HSBC's whose EIR maxes out at 10%.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
UOBS$02.88% for 1 year, 7.88% for the 2nd-5th year10.72%5 YearsS$30,000 to S$120,000
As low as 6%1-4 Years or 6 Years
OCBCS$06%10.46%1-8 YearsS$30,000 to S$120,000
CitibankNot listed, but mentions EIR of 10.5%Up to 7 YearsS$30,000 to S$120,000

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