OCBC Debt Consolidation Plan Review: Enjoy Simplified Finances
Let’s start with a question. Is managing a single, fixed monthly payment easier or is it easier to juggle between multiple payments? The first one, right? Who wants to deal with multiple lenders, remember multiple due dates and switch between fixed payments and minimum monthly payments, especially when your debt situation is already pretty bad? DCP loans have many benefits. When you choose the OCBC Debt Consolidation Plan, you can expect a uniform applied interest rate of 6% p.a. for all tenures and freedom to choose a tenure from 3 years to 8 years.
Let us turn our attention to some of the best features and benefits offered by this product in the following section.
Low Interest Charges, Complimentary Credit Card: How Good Is the Loan for Your Needs?
A glance through the features of this product may help you get a fairly good idea of the effectiveness of this loan. Here are some of the most important benefits:
Maximum loan amount: If you’re applying for this loan for the first time, you’ll get an amount determined by OCBC and an additional 5% for incidental charges that may arise during the period between the submission of the application and the approval. However, the additional allowance won’t be offered for subsequent refinancing arrangements.
Minimum loan amount: You can’t apply for this programme unless your total outstanding debt exceeds 12x your monthly income. Hence, the minimum loan amount will also have to exceed 12 times your earnings in a single month.
Loan tenure: Your loan repayment period can be anywhere between 3 years and 8 years.
Higher interest savings: In general, most unsecured credit facilities charge higher interest rates than DCP loans. Hence if you subscribe to this product, you can expect to lower your interest charges significantly.
Fixed monthly payments: As you’ll henceforth have to make just one fixed payment every month, you can expect to improve your cash flow and manage your finances better.
Convenient payment modes: Settle your payments conveniently using any one of the following channels:
Credit card with no annual fee: Get a card with a credit limit equal to your monthly income when you apply for this DCP facility. You’ll be charged no annual fee for this card. Managing your daily expenses can become easier with the OCBC Platinum Credit Card. You’ll receive OCBC$1 for every S$1 you charge to this card. You’ll also enjoy all the perks and benefits that are available to other cardholders.
Hassle-free application: Enjoy a fast and hassle-free application process. You can choose from multiple application channels as per your preference.
No or little involvement: Once your application is approved, you won’t have to separately approach your lenders and ask them to suspend your borrowing accounts. OCBC will do it. However, you’ll still be responsible for any outstanding balance in any of these accounts that aren’t covered by the new loan.
Fast disbursal: It may take OCBC between 3 working days and 5 working days to inform your existing creditors of account suspension and to release funds for settlement of the dues.
Lower Your Borrowing Cost With Affordable Interest Rates
If you consolidate the unpaid balances on all your existing unsecured credit facilities under this programme, you may be able to lower your interest payments considerably and thereby reduce your monthly costs. Here are the rates that would apply depending on the tenure of the loan:
Flat Interest Rate
Effective Interest Rate
Let Us Illustrate:
Let us consider 2 cases.
For the first one, let us assume that you want to consolidate a total debt of S$10,000 with this OCBC debt programme. If you set the tenure at 6 years, you’ll be granted a total loan amount of S$10,500 (provided you aren’t refinancing an existing DCP loan) and your monthly instalment amount will be S$198 (applied interest rate = 6% p.a., effective interest rate = 10.72% p.a.).
For the second case, let us assume that you’re refinancing an existing DCP. Keeping all the parameters from the above example unchanged, your monthly instalment amount will be S$189. That is because in this case, your total loan amount will be S$10,000 (since the extra 5% allowance won’t be available). The effective interest rate and the flat rate remain unchanged.
[Disclaimer: The numbers used in the aforementioned cases are purely for illustrative purposes and may bear no resemblance to reality. We have used the calculator available on the bank’s website to create the two examples.]
Fees and Charges That May Apply to Your Loan
The cost of your borrowing has 2 components - interest payments and fees. If any one of the two or both the components are relatively high, your cost burden is going to be high. Hence, you can only save more if both your interest charges and fees are low. If you sign up for this loan, here are the fees that you may have to deal with:
Minimum monthly payment
3% of the outstanding late dues plus the regular instalment amount, subject to a minimum of S$50
Deposit or payment at a teller counter
S$25 for every single deposit
5% of the outstanding dues
If you decide to use your card, you may have to pay the following fees:
Minimum Monthly Payment
3% of the outstanding due, subject to a minimum of S$50
Effective Interest Rate
Cash Advance Interest Rate
28.92% p.a., subject to a minimum of S$2.5 per month
Cash Advance Fee
6% of the cash withdrawn, subject to a minimum of S$15
Keep in Mind: Certain Classes of Loans Can’t Be Consolidated
Even though a DCP is often seen as one of the safest and most convenient ways to dodge bankruptcy, there are certain things that you should consider before you apply for one. If you’re planning to apply for this OCBC loan, here are some of the things that you should keep in mind:
Outstanding balances in your education loan accounts, medical loan accounts, renovation loan accounts, and business loan accounts can’t be consolidated. Any outstanding balance in your joint accounts, if any, can’t be consolidated either.
Partial consolidation of the balances on your existing unsecured credit facilities isn’t possible.
You can’t ask for temporary credit limit increase on your OCBC card even if faced with exigencies.
Once you apply for this loan, you’ll have no further access to your existing credit facilities.
In case the approved loan amount doesn’t cover the total outstanding due, your liability towards such unsettled accounts will remain intact. You’ll have to make arrangements to settle them.
As a DCP borrower, if you ever default on an existing credit facility with unsettled dues (before the disbursal of your DCP loan amount), your creditor(s) will have the right to implement their regular remedial measures. The same applies if the DCP loan amount does not cover the total outstanding dues.
You can start applying for new unsecured loans only when your balance to income (BTI) ratio becomes equal to 8 or goes below it, if you want to apply with a new lender or your BTI should be lower than 4, if you’re planning to apply for a loan from OCBC (current DCP lender).
You can’t apply for or have access to multiple DCP loans at the same time. All records of your DCP transactions/applications are maintained in a centralised registry called the DC Registry and it helps banks ensure that you don’t have more than one DCP account.
You may be charged a default interest if you fail to pay the monthly instalment amount within the due date.
If there are standing instructions of recurring payments in relation to your designated accounts, you’ll have to make sure that you set up alternative payment arrangements in agreement with the respective billing organisations.
Are You Eligible to Apply?
Before you apply, make sure that you meet these eligibility requirements:
You’re aged 21 years or above.
You’re a citizen or permanent resident of Singapore.
You annual income is at least S$30,000 but not more than S$120,000.
The outstanding debt on your existing unsecured credit facilities exceed 12 times your monthly income.
Click here if you want to learn more about the general OCBC personal loan eligibility criteria.
Documents That You Would Need to Provide for Verification
At the time of application, you’ll also have to provide the following documents:
Copies of credit statements, online invoices, proof of unbilled balances, and confirmation letters (whichever is applicable).
Relevant income documents such as your latest electronic payslip and the most recent Income Tax Notice of Assessment OR proof of contributions made to your CPF Account within the last 6 months (only if your monthly income is less than or equal to S$6,000).
Modes of Application That You Can Employ
Ready to apply? You may use any one of the following modes of application:
Complete the online contact form. The bank will contact you within 3 working days.
Call the bank’s hotline on weekdays, between 9:00 a.m. and 6:00 p.m.
Send a completed form to the bank with your supporting documents.
What Else Should You Know?
Q. Can I refinance my OCBC DCP loan with another bank?
A. Yes, you can. However, you’ll have to wait for at least 3 months after your OCBC DCP account closure before you can refinance it with another lender.
Q. How long does the bank generally take for processing a DCP loan?
A. Provided all the documents are in order and the bank’s queries have been satisfactorily answered, you can expect the bank to take up to 7 business days to process your application.
Q. My income has recently increased. Can I request the bank to increase the credit limit on my card permanently?
A. Yes, it is possible. However, the bank may ask for supporting income documents to validate your request and process it.
Q. Can I choose not to take the OCBC credit card that I am being offered with this DCP loan?
A. No. You’ll have to take it as it comes bundled with the DCP as a single product. However, you may choose not to use it.
Q. What is the process of application and approval?
A. You’ll have to download the relevant form and mail it to the bank after completing it along with the necessary documents. The processing period may take a while. However, the bank will notify you of the status of your application through a mail within 10 business days. Disbursal of the loan may take up to 5 working days after approval.