What is Debt Consolidation?
Debt consolidation is defined as combining multiple debts such as credit card bills into a single monthly payment loan, usually in the form of a personal loan which may be lower in interest. In simple terms, it is using one loan to pay off multiple existing loans or credit cards so that the repayment process will be simplified. This helps the borrower to efficiently keep track of their monthly repayments when it’s rolled into one.
How Does Debt Consolidation Work?
Typically when consolidating a debt, a borrower applies for a loan in the form of a personal loan or a balance transfer credit card through banks or another financial institution. When a borrower takes up a debt consolidation loan, the lender may pay off the borrower’s multiple debts directly and bill the borrower by monthly repayments.
Alternatively, the borrower would get the loan in the form of cash and pay off the outstanding balances. Banks may offer this service by means of a balance transfer; which means transferring all the outstanding credit card debts from other banks and consolidating them into a repayment process for the borrower.
Debt consolidation is attractive in the sense it helps to lower the amount a borrower needs to pay each month, along with a lower interest. This is accomplished by extending the loan period of the loans consolidated, making them more manageable and affordable for the borrower.
Why Should I Consolidate My Debt?
Consolidating your debts help give you a clearer picture of your financial health and shows what you owe. With multiple loans to keep track of, it is easy to sometimes overlook the bills and forget to make your repayments. Missing out on your monthly repayments often cost you extra interest.
Those late interest, when piled up really adds to your debts. If you are easily overwhelmed with bills and find it hard to manage multiple accounts, debt consolidation is for you.
To fully take advantage of a debt consolidation personal loan, research on financial institutions that offer a much lower interest rate than others in the market. The lowest interest rate loans range from 4.8% to 8% in the market. Let’s look at the top 10 loan consolidation institutions in Malaysia.
Best Debt Consolidation Companies in Malaysia
1. Alliance CashFirst Personal Loan
Alliance CashFirst Personal Loan offers a fixed rate of 4.99% p.a for 1-2 years tenure and 6.99% p.a for 3-4 years tenure. This personal loan helps consolidate commitments from credit card, personal loan, home loan, or car loan into one single monthly repayment. Approval takes 24 hours.
- Minimum loan amount RM 5,000
- Maximum loan amount RM 150,000
- No early settlement is allowed.
- Minimum monthly salary RM 3,000
- Age requirement 21-60 years old
2. Standard Chartered Cash One
Standard Chartered Cash One is a personal loan that works hard for you.
It offers borrowers financial flexibility: Each time you make your monthly loan repayment, it rewards you by converting the paid principal amount into a credit card limit for you to spend. It also offers a competitive rate of 0.583% per month depending on loan amount and tenure.
- Flexible Repayment Tenure from 12 – 84 months
- Lifetime annual fee waiver
- 100% disbursement with low monthly installments.
- No hidden fees and charges
3. HSBC Amanah Personal Financing-i
HSBC Amanah Personal Financing-i is a very flexible personal loan. Paid principal amount can be withdrawn again in case of emergency. There are no fixed installment obligations. You only need to service the monthly interest. The application process is also fast and hassle free. HSBC Amanah Personal Financing-I also provides financing up to RM 150,000.
- Repayment as low as RM 134
- Payment period up to 7 years
- Instant cash disbursement into your financing account with HSBC Amanda’s upon approval
- Flat rate from 10.5% per annum
4. Ambank Personal Financing-i
AmBank Personal Financing-i is a suitable personal loan to finance unplanned events, and when you have maxed out on your credit cards. It gives you a rebate on early settlement and requires no advanced installments.
- No guarantor & collateral required
- No monthly membership fee
- Takaful coverage (optional)
5. Hong Leong Personal loan/ financing- i consolidation
Hong Leong Personal loan/Financing-i consolidation allows you to pay off outstanding balances from 3.88% p.a.
- Helps consolidate multiple payments into a sing,e installment and helps you save on interest.
- Affordable installments for tenures from 2 to 5 years.
6. Maybank Personal Financing-i
Maybank personal loan: