It’s advisable to save money for big purchases, but most of the time it’s not possible. This is why most people take loans for various uses like unexpected emergencies, buying a car or even a home. This article will validate why there’s a need to consolidate debts loan for easier repayment.

There are different types of loans: student loans, mortgage loans, small business loans, personal loans, and consolidated debts loans. This article is dedicated to guiding you on what to consider regarding personal loans and debt consolidation loans.

What are debt consolidation loans?

A debt consolidation loan is where you apply for a loan to pay off existing loans. This saves you cost and leaves you with only one repayment per month.

1. Using the funds for something frolicsome

One could be tempted to use a low-cost personal loan to pay for a luxury vacation or buy non-essential products as it could be more affordable than using a credit card. However, it’s not the best decision as it could reflect badly on your financial status, especially if you cannot make payments on time.

Instead, a personal loan should be used for something important like debt consolidation or to cover emergencies. This is because consolidated debts help you repay your loan less, while emergency expenses are important.

2. Not reviewing the charges and fees

Personal loans may come with extra costs and hidden charges, including late payment fees, origination fees, and prepayment penalties.

It’s good to ask about any fees involved before signing for the loan.

3. Failure to compare lenders

Every lender offers different loan terms, and they have different ways of evaluating credibility. If you settle on the first loan you find, you can miss securing a loan with better terms and more flexibility.

You should always compare about three lenders. Check for various factors like availability, fees and repayment terms. If seeking to consolidate debts loans, you should go for the lender who will save you the most money.

4. Late repayment

Late repayments badly affect your credit scores. You might also be forced to pay a late fee, depending on your lender’s terms, which increases the overall cost.

To avoid late repayment, you can set a reminder to alert you a few days before the repayment is due or authorize your lender to auto-deduct the amount from your account. If you don’t have funds, you can also consider a consolidated debts loan making it less costly and maintaining your credit scores.

5. Failure to consider alternative options

Thinking that a personal loan is the best option out there is a big mistake.

If you have good credit, you can seek a card with a promotional annual percentage rate (APR) rate. Sometimes cards are offered with a promotional discount of 0% APR in an attempt to get new customers. These can be a great way to consolidate a loan or buy something expensive for less. Ensure you repay the balance before the promotional time, which is mostly 12 to 18 months, ends to avoid extra charges.

If you have fair or bad credit, you can seek a secured loan that has lower costs. Secured loans are backed by collateral that the lender can seize if you default.

Three best personal loans

• Standard Chartered CashOne

Standard chartered approves loan instantly, and money is sent within 15 minutes. For eligibility, one must apply through MoneySmart. The minimum loan amount is S$1,000. It has an interest rate of 3.48% and a processing fee of S$0.

• HSBC Personal Loan

It has the longest repayment period of up to 7 years, an interest rate of 3.2%, and a processing fee of S$0%. It can, however, take up to 5 days to approve.

• DBS Personal Loan

If you are a customer of the DBS/POSB, you’ll get instant approval of loan, and money is sent immediately. If you are not a customer, you need to open an account first. It has an interest rate of 3.88% and a processing fee of S$100


If you have multiple loans, it’s recommended to consolidate debts loan for easier repayment and lower repayment cost. However, in doing so and in the general application of personal loans, one should exercise caution and ensure you fully understand your lender’s terms. Ask all the necessary questions before signing a loan to avoid complications in the future. With that, it will be easy to apply and repay a personal loan.