POSB is one of the oldest banks in Singapore that has been in continuous operation. The bank is now a subsidiary of DBS and offers a range of affordable banking products to its wide consumer base. Products range from deposits to unsecured loans.
The POSB Debt Consolidation plan is one of their unsecured loan products which offers borrowers a chance to consolidate outstanding unsecured loan balances from one or more banks into one loan with a fixed monthly instalment at a lower rate of interest.
The features of the POSB DCP are as follows:
The POSB DCP offers a maximum tenure of 8 years. The bank charges a flat rate of interest of 4.58% p.a. with an Effective Rate of Interest or EIR starting as low as 8.22% p.a. The EIR is inclusive of various incidental charges such as processing fees. While the plan offers a fixed monthly instalment, the principal and interest component of the instalment varies throughout the tenure.
Assume the borrower has 3 lines of outstanding unsecured debt from 3 different banks with each being a credit card balance of S$10,000. Assuming the interest charges of this is 26% p.a., the borrower would be paying an interest of S$7,800 a year or S$46,800 for a tenure of 6 years. The borrower will not only have to manage multiple payments and varying due dates, but the total amount they would be paying monthly will also be quite high.
If the borrower went in for POSB debt consolidation loan, the interest charged would be 8.22% p.a. bringing the total interest payable in one year to S$2466 or S$14,796 for a tenure of 6 years. As we can see, the savings on interest alone is substantial not to mention, the monthly instalment will also be much lower.
The above example is a simplified illustration. Actual instalment amount, interest to be paid and other numbers will vary based on the amount of outstanding balances the loan amount taken, tenure chosen, and the interest rate offered.
The applicant must provide the following documents at the time of application:
Borrowers can apply for the POSB DCP through the following ways:
The additional 5% allowance is provided to cover any incidental charges from the time the DCP loan amount has been approved to the time the loan is disbursed. Incidental charges may include interest rates, late payment fees etc.
No. The debt consolidation loan will be disbursed directly to the banks with which the borrower has maintained an outstanding balance. The loan amount will not be given to the borrower.
No. At any given point of time, a borrower can hold only one DCP regardless of which financial institute they have taken it from.
The credit limit can only be increased if the borrower has had an increase in their monthly salary. Borrowers must submit relevant income documents showcasing increase in monthly salary to have their credit limits raised.
No. only unsecured lines of credit such as credit cards or personal loans can be consolidated under a debt consolidation loan.