DBS/POSB Debt Consolidation Plan Review: Put an End to the Cycle of Endless Bills
When your debts are piling on and on without a break, maintaining a track of the many bills from your unsecured credit facilities can indeed prove to be a challenge. Instead, it’s much easier to focus on one monthly payment and deal with just one financial institution, isn’t it? If you want to put a break to the cycle of endless bills, you may consider this debt consolidation facility from POSB. In addition to the convenience of consolidating your unsettled, unsecured debts, you’ll enjoy competitive interest rates and flexible loan tenures.
Affordable Interest Charges, Fixed Monthly Payments: Can This Loan Prove to Be a Smart Choice?
It’s undeniable that most DCPs in Singapore offer similar benefits. If you’re wondering why you should opt for this product vis-à-vis any other available in the market, consider the following product features and you may find a reason:
Maximum borrowing amount: If this is your first DCP loan, you’ll get an amount equal to your total outstanding debt plus an additional allowance of 5%. If you refinance this loan subsequently, you won’t get the additional allowance. Also, if a portion of the allowance remains unused, it will be refunded to you.
Minimum borrowing amount: The quantum of your DCP loan can’t be less than or equal to 12 times your monthly income.
Low-cost loan: As the nominal rate on this loan starts from 3.98% p.a., it’s a cost-effective loan.
Convenient payment: Set up an arrangement under which fixed monthly instalments will be directly debited from your designated account. There is no need to set up several standing instructions for bill payments or manually settle the dues on your unsecured credit arrangements.
Credit card for easy management of daily expenses: Get a DBS Visa Platinum Credit Card by signing up for this loan. The limit on the card will be the same as your monthly income. Enjoy an annual fee waiver on your card unless informed otherwise by the bank.
Loan tenure: You may choose a repayment period ranging between 1 year and 8 years.
No need to close accounts individually after DCP loan approval: After your loan is approved, you won’t have to separately approach your creditors and request suspension of the designated accounts. The bank will proceed to disburse the loan amount to any relevant creditor and ask them to terminate your old account(s).
Make Considerable Savings on Interest Payments with This Loan
Interest charges on this loan are quite competitive. The flat rates start from 3.98% p.a. and the effective interest rates (EIR) start from 7.23% p.a. EIR includes a one-time processing fee. To help you understand how much you can save, let us consider the following example:
Let us consider a scenario where you have a personal loan that charges nominal interest at the rate of 10% p.a. The loan amount is S$10,000. If you have to pay a processing fee of 1% upfront, then your monthly charges for a 1-year tenure will be S$915.83 (=10,000/12 + 10/100 x 9,900/12).
Contrast this with your DCP loan. The processing fee is S$99 and let’s consider the rate of interest to be 3.98% p.a. Keeping all other parameters unchanged, your monthly instalments, in this case, would be S$866.17 (=10,000/12 + 3.98/100 x 9,901/12). So, your savings will be close to 5.5%. In real life probably, you’ll also have credit cards and other forms of unsecured debt. When you consolidate them all, your savings could be much bigger.
[Disclaimer: The numbers, used in this example, are for illustrative purposes only. The results could be different in real life.]
Fees and Charges That You Need to Learn About
Prepayment or cancellation charges
5% of the loan undrawn at the time of settlement
If you don’t pay the monthly instalment amount on time, you may have to pay default interest charges in addition to a late fee.
If you start using your DBS Visa Platinum Credit Card, you may also have to bear the following charges:
Cash advance interest rate.
Cash advance fee.
Foreign currency transaction charges.
Keep in Mind: Cashback Will Be Forfeited If DCP Account Is Terminated Prematurely
Partial consolidation of your unsecured debts isn’t possible.
Certain types of unsecured debt such as business loans, medical loans, renovation loans, and education loans can’t be consolidated under this programme. Outstanding balances in joint loan accounts can’t be consolidated either.
Foreigners aren’t eligible for this programme.
Once your application is approved, you’ll no longer have access to your existing unsecured credit facilities. All these designated accounts will be suspended.
Requests for temporary increase of limit on your revolving line of credit won’t be entertained, too.
You’ll be charged applicable fees/charges for use of your card.
Even if your annual income is greater than S$120,000 or the net value of your personal assets exceeds S$2 million, you’ll still have access to no credit facilities other than your card if you have outstanding dues in your loan account.
The credit limit on the credit card is set at 1 times your monthly income. You cannot request for a temporary increase in this limit. You could, however, request for a permanent increase in the limit by providing supporting documents evidencing increase in your income.
Do You Meet the Eligibility Conditions for This Loan?
To qualify for the loan, you’ll have to satisfy the following conditions:
You should be a permanent resident in Singapore or a Singaporean.
You should be aged between 21 years and 65 years.
Your annual income should be between S$30,000 and S$120,000.
Your balance to income ratio should be greater than 12.
Learn more about the general POSB personal loan eligibility requirements here.
You’ll also have to provide the bank with the following general documents:
A copy of your NRIC.
A copy of your updated credit bureau report.
If you’re a salaried employee, you’ll additionally have to provide the following income documents:
Your Income Tax Notice of Assessment (NOA) for the last 1 year AND
CPF contribution statements for the last 1 year OR
Documents evidencing salary credit to your designated DBS/POSB account OR
The latest computerised payslip.
If you’re a commission-based earner or self-employed professional, you’ll have to provide:
NOA for the last 2 years.
Variable earners can alternatively submit CPF contribution history documents for the last 1 year.
Modes of Application Available to You
If you’re planning to apply, you may employ any one of the following modes:
Apply on our website.
Complete the contact form available on the bank’s website. Bank officials would get in touch with you.
Visit any POSB branch to complete the process.
Call the bank’s dedicated hotline during office hours on weekdays, except for public holidays.
Did You Know?
Q. When can I apply for a new unsecured loan again?
A. You can apply for a new loan only if:
Value of your total outstanding unsecured debt is 8 times your monthly income if you want to borrow from a non-DCP institution OR
Value of your total outstanding unsecured debt is 4 times your monthly income if you want to borrow from the DCP institution, which in this case, is POSB.
Q. Can I refinance my loan with another bank?
A. Yes, you can. However, you’ll have to wait for at least 3 months after you have cancelled your POSB DCP account, to do so.
Q. Can I ask the bank not to issue me a card?
A. No, you can’t. The revolving credit facility is bundled with the DCP loan as a single product. Hence, the bank is obligated to issue a card. However, you may choose not to use it.
Q. Will I receive loan statements at the end of every month?
A. No, you’ll receive statements on a yearly basis.
Q. I am enrolled in the RAS scheme. Can I apply for this POSB loan?
A. Yes, you’re eligible for this loan. If approved, any outstanding balance under the RAS scheme will be transferred to this programme.