Have you heard of the term DCP? A lot of people are unaware of this terminology. Today we are all set here to educate you about this term. The term has a lot of benefits once you receive the knowledge about it.
DPS stands for a debt consolidation plan. First, let’s tell you all about consolidation. Consolidation is a process of combining different things together. This is mainly done to create a synergy with more efficiency and effectiveness. Debt consolidation is the process of bringing together all your debts into one single platform. By doing this, you combine all your debts and make it one. This is called debt consolidation.
DCP is a plan using which you can combine all your loans together. Whether it is a car loan or a personal loan, you can bring all your loan under one platform. The main reason to do this is to avoid the confusion of interest rates, payment time, and tenure of the loan of various loans together. By consolidating the loans together, you avoid such confusion and land in a peaceful space, making it a single loan.
PAY LOWER RATE OF INTEREST WITH DCP
The main motive behind debt consolidation is to opt for a lower rate of interest. You will opt for a new loan to pay the existing loan. This is mainly done to save them money on the interest rate. If the interest rate of an initial loan is 18% and the consolidation plan offers you 9%, you are in profit. Debt consolidation plans are mainly to save you from paying more rate of interest—the debt consolidation plan of various banks of interest rate between 8 to 10%. In comparison, the interest rate on credit cards lies somewhere between 25 to 30% in Singapore.
Another advantage of opting for DCP is that you can reduce the tenure of your loan. When you start paying a lower rate of interest, you save extra money. The extra money can be used to pay the loan, in turn reducing the tenure of the loan.
SELECT YOUR LOAN PERIOD
On loans Singapore, it is compulsory to make the 3% payment of the total amount of credit card loan. If an individual fails to do so, he is fined with an additional late payment fee. As a result, the individual gets trapped in the vicious debt cycle if he fails to make the monthly payment of credit.
On the other hand, a debt consolidation loan gives you excellent offers. Using these and you can customize your loan tenure as per your requirement. You can manage what to pay, how much to pay, and when to pay. There are certain criteria as an individual has to meet before opting for a debt consolidation plan. If you are successful in meeting the DCP criteria, you are all set to opt for one.
There are various banks in Singapore for that of 8.5 to 10% of an interest rate for a loan ranging from 1 to 7 years or 1 to 10 years. You can choose the tenure of the loan as per your convenience. But remember the longer the tenure of the loan, the more interest amount you have to pay. If you are in the position to pay a higher monthly installment amount, then please do so. By doing this, you can save your money from getting wasted in interest.
DO NOT USE CREDIT CARD FACILITIES DURING DCP
While applying for DCP, make sure you do not use your existing credit card facilities. This is because once the DCP agreement is made, the changes cannot be made. The additional amount of credit facilities will either be ignored or suspended and will not come under the DCP. However, there are certain banks that let you manage these extra credit facility amount with the help of their credit cards.
ELIGIBILITY FOR DCP
A debt consolidation plan is a great option to repay back your loans. It basically helps you to get a great deal out of the interest rates. But not everybody can qualify for debt consolidation plans. If this was the case, then other banks would have gone in the loss by now. Let us study the points which will help you learn the eligibility criteria of the debt consolidation plan.
- You have to be a citizen of Singapore or a permanent dweller/resident.
- Your earnings should range between SGD30,000 – SGD1,20,000 p.a.
- You need to have all your interest-bearing credit loans 12 times more than your monthly salary. The credit loan should belong only to the financial institution of Singapore.
Besides these criteria, as there are other criteria that you have to meet for debt consolidation plans. Clearing of existing death doesn’t mean you are completely out of them. When you are for debt consolidation plans, you are opting for another loan that you have to clear. So, it’s basically a loan for a loan. The experts of debt consolidation plants will check for your spending habits. As a client of a debt consolidation plan, you have to plan your spending habits of the coming accordingly.
Debt consolidation plans this again a loan that you have to pay with interest. It is basically the combination of all your unsecured debts. You do not become free after opting for a debt consolidation plan. In fact, your responsibility increases because all the loans are put together and which has to be paid back together. If you do not pay back the monthly installments, you will end up putting yourself in the soup. On the contrary, if you pay the monthly installment on time, then DCP can be beneficial for you.
DO SOME RESEARCH
Before getting into any kind of loan policy, kindly do research on it. An in-depth search is very important before opting for a debt consolidation plan. You have to draft a sheet which states your total income, total loan amount, and the interest amount payable. By doing this, you will get a rough idea about your income and expense.