Best Debt Consolidation Plans 2019

Debt consolidation loans can be a helpful way to keep your personal debt 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. Below, we present a list of the best debt consolidation loans to allow you to compare rates and features and choose the best loan.

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Our Top Picks for the Best Debt Consolidation Plans 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 manage 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 DCP Promotion: POSB & DBS Debt Consolidation Plan

Consider this if you are able to secure their lowest rates and prefer cash back promotions

Balance to Income Ratio More than 12x monthly income
Early Repayment Fee 5% on outstanding loan amount
Late Payment Fee S$90
Processing Fee S$99

POSB & DBS's debt consolidation loans are among the best available in Singapore. The banks are advertising rates "as low as 3.98%" for tenures up to 8 years. This can actually work out well for some who can manage to secure these rates. Also, POSB & DBS are providing up to S$1,200 of cash back for new customers, which is one of the highest promotional welcome bonuses we've seen in the market. Its cashback deal for borrowers refinancing their debt consolidation loan is even more generous (S$2,000-S$3,000). However, since the wording is "as low as" 3.98%, you could actually end up paying an interest that is much higher. Also, POSB & DBS charge a processing fee of S$99, which can inflate your final cost, though comparatively much smaller than the cash rebate. For additional information, read our full review.

POSB/DBS Debt Consolidation LoanDetails
Processing FeeS$99
Flat Interest Rate 1-8 YearsAs low as 3.98%
PromotionUp to S$1,200 of cash back for new customers (existing customers: S$300 for loan of under S$75,000, S$800 for loan of over S$75,000); S$2,000 - S$3,000 cashback for borrowers refinancing DCP with POSB

Best Debt Consolidation Plan in Singapore: HSBC Debt Consolidation Plan

Consider this if you prefer a plan with the lowest interest rate and no processing fee

Balance to Income Ratio More than 12x monthly income
Early Repayment Fee 5% of redemption amount
Late Payment Fee S$75
Processing Fee S$88 or 1%, waived for online applications

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%, compared to 5-6% being charged by other banks. For longer tenures of 8 to 10 years, its rates are still the cheapest at 5.7% vs +6% of competitors. Not only that, customers who apply online can receive S$100 in cashback as a welcome gift. To learn more about HSBC's debt consolidation plan, read our full review.

Details of HSBC Debt Consolidation Loan

HSBC Debt Consolidation LoanDetails
Processing FeeS$88 or 1%, waived
Flat Interest Rate 1-7 Years4.0%
Flat Interest Rate 8-10 Years5.7%
PromotionS$100 cashback for online application + Processing 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.

Honorable Mention: Maybank Debt Consolidation Plan (DCP)

Consider this if you are offered one of their lowest rates and are unable to secure financing elsewhere

Balance to Income Ratio More than 12x monthly income
Early Repayment Fee 4% of outstanding balance or S$300, whichever is greater
Late Payment Fee 5% of the minimum monthly repayment or S$80, whichever is higher
Processing Fee Unknown

Maybank's debt consolidation loan is also worth considering due to its low rates and cashback promotion (S$388 upon approval). It is advertising rates "as low as 4.20%" for tenures 1 to 10 years. While these rates are similar to those of other banks, you should also beware that this wording is ambiguous and you could end up with a higher cost in reality. To learn more, read our full review. Individuals interest in applying can simply send an SMS message to Maybank. SMS: < LCP_VP > < NRIC > < Name > to 79898.

Processing FeeFlat RateMin EIRTenureAnnual Income Requirement
Maybank DCPUnknownAs low as 4.20%7.64%1-10 YearsS$30,000 to S$120,000
PromotionS$388 cashback upon approval

Lowest Advertised Rates: CIMB Bank Debt Consolidation Plan

CIMB Debt Consolidation Plan

Consider this if you are offered a lower rate than at other banks or are unable to secure financing elsewhere

Balance to Income Ratio More than 12x monthly income
Early Repayment Fee 3% of outstanding principal amount or $250, whichever is greater
Late Payment Fee S$100
Processing Fee 1%

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. Read our full review for more information.

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. 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 charge an interest rate of 4.99% and 6%, which are higher than HSBC's rates. It is unclear if they charge processing or joining fees. While UOB does offer a promotional rate of 4.5% for new customers, HSBC's rates are still lower for tenures of 1 - 7 years. 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$04.5% for new UOB customers10.72%1 - 6 YearsS$30,000 to S$120,000
4.99% for existing UOB customers
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

How to Compare Debt Consolidation Loans

Comparing debt consolidation loans should be a relatively straightforward process. First, borrowers will need to decide how long it will take to repay their debt. Debt consolidation loans tend to range from 1 to 10 years, though not all lenders offer loans of 8 to 10 years. Next, borrowers must consider the total cost of their debt consolidation plan. This includes interest rates, processing fees and any promotions. Not all lenders guarantee their advertised rates, so it is important to carefully review the terms and conditions of each loan.

Duckju Kang

Duckju is the Senior Vice President of ValueChampion Singapore. He covers the financial services industry, consumer finance products, budgeting, and investing. He previously worked in the financial services industry, including at such hedge funds as Tiger Asia and Cadian Capital.

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