CIMB Debt Consolidation Plan Review:Low Interest Rate Starting From 2.77% p.a
If you’re someone who needs to consolidate all the debts from your unsecured credit facilities, you’re probably not in a great financial situation. But, it’s certainly not the end of the road for you. In fact, with a debt consolidation plan (DCP) such as the CIMB Debt Consolidation Plan, you may be able to navigate past the impediments that’re trying to break your flow and destabilise your life.
This loan product from CIMB offers one of the most competitive interest rates from 2.77% p.a. You’ll also enjoy a great degree of flexibility in choosing a tenure that suits your plans for revival. You may also enjoy greater control over your finances and also have a more stable cash flow.
Tenure of Up to 8 Years, Card for Better Cash Flow Management: How Good Is the Loan?
Are you caught up in two minds between applying for this CIMB loan product and spending some more time on shopping around? While we won’t discourage you from shopping around, we just want you to know the features and benefits of this product so that you can make an informed decision:
Maximum borrowing limit: It is the total statemented outstanding balance on your unsecured credit facilities with an additional allowance of 5%.
Minimum borrowing limit: The borrowing amount has to be greater than 12 times your monthly income.
Consolidation across multiple accounts and financial institutions: This facility can be used to consolidate outstanding balances on your unsecured credit facilities across multiple banks in Singapore, including your CIMB unsecured borrowing accounts.
Structured payments and flexible loan tenure: Gain better control over your finances by repaying the loan through a structured payment setup. The loan tenure can be from 1 year to 8 years.
Better control on daily expenses with a credit card: Improve your cash flow by better managing your daily expenses with a card that has a credit limit equal to your monthly income.
Option to refinance existing DCP: If you want to refinance an existing DCP with one from CIMB, you can do it. You may have to wait for at least 3 months from your last DCP approval before you can refinance with CIMB.
Settle Your Debt Faster With Affordable Interest Charges
Once you miss one or two payments on a line of credit or make late payments, apart from additional fees and charges, higher interest charges can become applicable. This can only make your job of debt settlement trickier. The applied rate on this loan starts from 2.77% p.a. and the effective rate of interest (EIR) starts from 7% p.a. Since the applied rate is extremely competitive, you can lower your interest liability considerably and make your debt burden manageable.
Let Us Illustrate
Let us assume that you have an aggregate debt of S$24,000. With the debt plan from CIMB, you’ll be paying an interest of S$1,680 in a year at 7% p.a. For argument’s sake, let’s assume that you had taken a cash advance of an equal amount on your credit card. An interest rate of 28% p.a. (approximately) would have applied to the debt and a fee of 6%, subject to a minimum of S$15 would also have been imposed. Your interest charge, in this case, would have been S$8,160 (=28/100 x 24,000 + 6/100 x 24,000). Your interest savings? S$6,480 in a year.
[Disclaimer: The numbers used and the results shown here are for illustrative purposes only. The actual results could be very different.]
What Are the Fees and Charges on This Loan?
One-time handling charge
Early termination fee (in case of prepayment or refinancing)
3% of the outstanding balance or S$250, whichever is higher
EIR if payment is not made in full within due date
25.5% p.a. (2.125% per month)
Default interest rate
28% p.a. (2.333% per month), subject to a minimum of S$2.5
Consider Carefully: Suspension of Existing Unsecured Credit Facilities
A debt consolidation plan may often seem to be the only feasible solution for someone who has plunged neck-deep in debt. It is also true that by consolidating your unsecured debt with this CIMB loan, you may manage to save on interest payments and regularise your cash flow. However, it’s worth considering these points before you apply:
Once you apply for a DCP, you’ll no longer have access to your existing credit facilities. Once your application is approved by CIMB, all your existing loan/credit accounts will be suspended.
Although you’ll no longer have access to your existing credit facilities, your obligations towards them and the lenders, will remain intact. If the approved DCP amount isn’t sufficient to pay off your debt in full, you’ll have to make separate arrangements for repaying the outstanding balance.
A lender will have the right to implement remedial measures, in line with their prevailing policies, if you fail to settle the dues in full, even after your DCP application has been approved.
Your credit report may be affected after your DCP application is approved as it will appear on your credit report for 3 years after the termination of your DCP account.
You won’t be granted any new unsecured credit facility with CIMB until your BTI (aggregate of your interest bearing outstanding balance/monthly income) falls below 8x your monthly income. You can apply for credit facilities from other banks/financial institutions if your BTI comes down to 4x your monthly income.
This DCP arrangement can’t be utilised for settlement of the following unsecured credit facilities:
Credit facilities for business purposes
Outstanding balance on joint credit accounts
Partial consolidation of your debts isn’t possible under this programme. You’ll have to consolidate all your unsecured debts under the programme with one participating lender.
Are You Eligible for This Loan?
In order to be eligible, you’ll have to satisfy the following conditions:
You’re a Singaporean or PR.
Your annual income is greater than or equal to S$30,000 but doesn’t exceed S$120,000.
You’re a CIMB cardholder.
The aggregate debt on all your credit facilities in Singapore exceed 12 times your monthly earnings.
You’ll also have to provide the following documents for verification:
If you’re a salaried employee, you’ll have to provide one of the following:
Your latest computerised payslip.
Your CPF statements for the last 12 months.
CPF contribution history for the last 12 months and Notice of Assessment (NOA) from the tax department ot latest computerised payslip.
If you’re self-employed, you’ll have to provide both the following:
Bank statements for the last 3 months.
Income Tax NOA for the last 2 years.
If you’re a commission-based earner/variable income earner, provide one of the following:
Your CPF Contribution History for the last 12 months.
Income Tax NOA for the last 2 years.
You also have to provide proof of your outstanding debts on unsecured credit facilities. The following documents may be needed:
Letters that confirm new balance transfers and loans, and other documents that provide information about your credit accounts and balances.
Billed card and loan statements.
Evidences of unbilled balances on your credit facilities. Charge slips or online statements may be accepted for the purpose.
In addition, the bank may ask for other documents or additional information on a case-by-case basis.
Want to Apply? Here’s What You Should Do
In order to apply, first choose your preferred mode of communication. Here are the options available:
Download and send the completed form to the bank. You may download the form along with the business reply envelope from the bank’s website and print a copy. Use it for mailing your application form.
Fill up the “Let Us Call You” form available on the CIMB website. The bank will get in touch with you. You can also indicate your preferred channel of communication. The options available are voice calling, emailing, and text messaging.
You may also contact the bank by calling their hotline number or sending them an email. You may also visit a CIMB branch.
Want More Information? Find Answers to Relevant Questions in the Following Section
Q. I have a GIRO/auto-debit arrangement for one of my existing credit facilities. Do I have to terminate it after my DCP is approved?
A. Yes. Whether you have an auto-debit arrangement with your existing creditor(s) or other billing organisations, make sure to terminate the arrangement or make alternative payment arrangements, where necessary.
Q. Do I need to inform my existing creditors of account closure after my DCP application is approved?
A. That may not be necessary. The lender with whom you have entered into a DCP arrangement, will settle the outstanding debts with your existing creditors and also ask them to suspend your accounts.
Q. I am enrolled in the RAS programme. Can I apply for this CIMB debt programme?
A. Yes, you can. If your DCP application is approved, the outstanding balance you have under the RAS programme will be transferred to this CIMB debt programme and the DCP rules and clauses will apply.
Q. Can I refuse the credit card that I am being offered along with this programme?
A. No, you can’t. The revolving credit facility comes free with this DCP and any financial institution you approach will mandatorily grant it. However, you may choose not to utilise it.
Q. Can I request the bank for a temporary credit limit increase on my card?
A. No. Under no circumstance will the credit limit on the card can exceed 1x your monthly income. However, you may apply for a permanent credit limit increase with supporting documents, provided you’re eligible for it.