Malaysia Department of Insolvency statistic show that there is over 95,000 individuals that have been declared bankrupt from year 2014 – 2018. This means that there is averagely 19,000 of individuals that were unable to manage their debt burdens on yearly basis. Excessive borrowings and uncontrolled usage on future money (credit cards and personal loans) dragged them into insolvency. Debt consolidation is one of the method in debt management. However, not all bank offers debt consolidation services and you need to fulfil specific terms and conditions for this application.
Why Debt Consolidation?
- To combine all existing debts (personal loans, credit card loans, term loans, hire purchase loans, overdraft and etc.) into one single loan. Instead of juggling with different banks and different amounts, you can have one easy payment to only one bank. Easy to manage and no afraid of late payment anymore.
- To lower loan repayments – total monthly repayment of all outstanding debts can be suffocating and a huge burden to bear. With debt consolidation, you can lower the interest rates and extend the loan tenure to make monthly instalment more affordable.
- To settle credit card loans – credit cards are the most widely used payment instruments in Malaysia. Outstanding balances for credit cards is being charged at a minimum of 18.00% (varies with Bank policy) on compounding basis. This will have caused snowball effects that make repayment extremely difficult. High credit card utilization and outstanding balances will make any new loan applications in the future not favorable.
Example of how debt consolidation works:
- Credit Card Outstanding Balance of RM5, 000 with monthly minimum payment of RM250
- Credit Card Outstanding Balance of RM13, 000 with monthly minimum payment of RM650
- Personal Loan of RM25, 000 with monthly instalment of RM1, 500
- Student Loan of RM40, 000 with monthly instalment of RM200
- Hire Purchase Loan of RM50, 000 with monthly instalment of RM800
* Based on varies loan tenure and interest rates
* Monthly installment = RM3,400 with payment to six different Banks and date!
* New monthly instalment as low as RM600 compared to previous RM3, 400 with payment to only one bank.
One Single Payment
To ONE Bank Only!
Averagely lower interest rate & flexibility of repayment