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Humanising Finance
April 2017
   
 

Understanding Debt Consolidation Plan

In order to cope with the various demands or unforeseen emergencies in life, it may be inevitable that you may get into unsecured debt. If you are facing difficulty managing your existing debt or keeping up with the multiple payments every month, the newly launched Debt Consolidation Plan (DCP) will be a welcome solution.
 
 
What is DCP?
DCP is a repayment scheme which allows you to bring together your unsecured outstanding balances on credit cards and unsecured loans from various banks to a single monthly payment with one bank. DCP is beneficial to borrowers and can definitely help in managing your escalating debt.
 
 
Some reasons why you should take up DCP:
  1. Better cash flow -- A manageable monthly repayment amount and an ideal payment period can be worked out based on your financial situation and servicing capability.
  2. Cultivate a disciplined payment habit -- Monthly servicing of a fixed amount is required based on agreed terms throughout the loan tenure. Having just one payment date also makes it easier for you to manage your finances.
  3. Reduced interest on the total outstanding amount you owe -- Interest charges tend to be significantly lower than the usual credit facilities, hence the monthly payment will pay off more of the principal amount than what you were previously paying.
  4. Lastly, you can be assured of achieving financial freedom at the end of your DCP loan tenure!
 
 
How does a Debt Consolidation Plan work?
Various banks have started offering DCP as a commercial product. Interest charges and terms of borrowing vary from bank to bank so do shop around beforehand for the most favourable terms.

Maybank is one of the participating financial institutions and has a team of professional DCP consultants who can offer personalised financial assessments to work out a schedule that caters best to your servicing capacity.
 

It pays to maintain a good credit history with all banks because at the point of application, a rigorous credit review is usually done by the Debt Consolidating (DC) bank. Post approval, the DC bank will make a direct payment to the other banks on your behalf. A single DC servicing account will then be created to facilitate your monthly repayment to the DC bank. The total DCP amount will be based on your submitted documents and an additional 5% to offset any incidental fees and charges.

You can only have one DCP at any point in time. At the same time, you can enjoy a revolving credit facility with the DC bank, capped at one month of your income, to meet your day-to-day spending needs. Do note that the DC bank will inform the other banks that you have banking relationships with about your DCP take-up, and you will not be allowed further usage of your unsecured facilities with them.
 
 
 
Who will qualify for DCP?
You need to
  • Be a Singaporean or Permanent Resident
  • Earn between S$20,000 to S$120,000 per annum; or have net personal assets less than S$2million
  • Have total interest-bearing unsecured debt on all credit cards and unsecured* credit facilities with financial institutions in Singapore that exceeds 12 times your monthly income
(*excludes renovation loans, education loans, medical loans, travel loans, credit facilities granted for businesses or business purposes and outstanding debts under joint accounts)
 
 
Maybank offers DCP with effective interest rate (EIR) from as low as 8.48% p.a. and a loan tenure of up to 10 years. From 1 March to 30 April 2017, the first 300 eligible customers will also receive cash rebates of S$388 upon approval of their Maybank DCP. Contact us now for a personalised DCP consultation. SMS <DCP> <NRIC> to 79898. More details are available here.

Always wanted to find out more about a finance-related issue? Email us at: corporateaffairs@maybank.com.sg
 
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