Personal loans for debt consolidation

Compare personal loan options to consolidate your debts into one payment.

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Debt consolidation allows you to combine all your loans into one. Essentially, it can give you a way to reduce your interest rates and fees, and help you to get out of debt. If you choose to consolidate your debt, you’ll have one loan repayment to worry about rather than several.

While debt consolidation loans offer reduced interest and fees, it’s important to also consider refinancing costs and early payout fees from your existing loans to see if the cost of consolidating will cost more than the money you save. Learn more and compare your options in our guide.

Compare debt consolidation loans

Name Product Interest Rate From Maximum Loan Amount Loan Tenure
HSBC Debt Consolidation Loan
Equivalent to the total outstanding principal balance subject to additional 5% allowance on top of the total DCP amount.
Up to 10 years
Consolidate your outstanding balances from as low as 3.8% p.a. (EIR 7% p.a.) with no processing fee. T&Cs apply. Ends 30 June 2020.

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How does consolidating debt with a personal loan work?

If you have multiple debts, such as a loan and credit card, you can take out a personal loan to cover the money you owe, then simply make repayments on the new loan. If the rate offered on the personal loan is lower than that of your other debts, you will save money through lower repayments.

However, you will need to be aware of any refinancing costs or early payout fees on your other debts, as these will also need to be paid as part of the process.

What debt can I consolidate?

It’s possible to consolidate a variety of debts using one of these loans. Common types of debt that are consolidated include the following:

  • Personal loans. This is a common type of debt that is often consolidated. You can take out a debt consolidation loan to consolidate two or more separate personal loans, a personal loan and another type of credit, or even refinance a personal loan to one with a lower rate and/or fees.
  • Credit cards. If you have a large outstanding balance due on your credit card, then you can consider taking out a personal loan to pay it off. This is often an option when you want to consolidate your credit card as well as another debt, or if you aren’t a candidate for a balance transfer.
  • Store/charge cards. Balances can easily increase on store and charge cards as they do on credit cards, making them another type of debt people choose to consolidate.
  • Other credit accounts. Depending on the loan you take out, you may also be able to consolidate other types of debt. This can include private loans, debts to utility companies etc. Check with the credit provider to see what kind of debts they allow you to consolidate.

Steps to consolidating your debt with a personal loan

Once you have decided to consolidate your debt, you will need to do the following:

  • Calculate how much you need to borrow to cover your debts. This should include any fees or charges you will have to cover in order to pay off your existing debts early.
  • Research and compare personal loan products to find one that meets your needs.
  • Apply for the personal loan.
  • Use the funds to pay off your other debts, along with any fees or charges.
  • Continue to make repayments on your personal loan until it has been repaid.

What to consider when consolidating debt with a personal loan

  • Affordability. You should confirm that the personal loan you use will be cheaper to pay off than your existing debts. You must also ensure that you will be able to cover the repayments on your new loan to avoid going into further debt.
  • Early repayment costs. Many loans will require you to pay additional fees or charges if you repay the loan early. These will need to be paid if you wish to consolidate your debts under a new loan and should be included in your calculations to ensure debt consolidation is the right choice for you.
  • Legitimacy. If you decide to use the services of a credit provider or a debt consolidation organisation, it’s your responsibility to check for its Ministry of Law licensing. This is because there are brokers and credit providers who operate illegally in Singapore.

I have bad credit, can I still consolidate my debt?

Bad credit can strike at any time. Whether you lose your job or miss a few repayments due to illness, debt consolidation for bad credit borrowers is still possible. If you find that your repayments are spiralling out of control, debt consolidation could be for you. With the help of our guide, you could potentially get your finances back on track.

Pros and cons of debt consolidation


  • You can lower your costs and repayments. The majority of people who opt for debt consolidation do so in order to benefit from lower costs, and if you choose to consolidate your debt, you can potentially save as much as 50% on outgoing costs. If you’re looking for a debt consolidation mortgage, you can expect to benefit from lower interest rates than with credit cards and personal loans.
  • No more phone calls from debt collectors. If you’re running behind on payments you probably receive a number of pesky phone calls from people chasing you for money. Once you consolidate all your loans, the phone calls will most likely stop.
  • You could avoid bankruptcy. If you see yourself struggling to make multiple payments and think you might be headed for bankruptcy, consolidating your debts can give you a chance to get back on track.


  • You could lose your property to foreclosure. If you get a debt consolidation mortgage and fail to make timely payments, you give the lender the right to foreclose on your property. This is because the lender uses your property as collateral towards the amount you borrow, so when you fail to repay this amount in a timely manner, you stand to lose the property in question.
  • Increasing debt. There are instances when people who opt for debt consolidation end up increasing their debt. For example, if you consolidate your credit card balances through a debt consolidation mortgage, you might start racking up big debts on your credit cards again and worsen your problems.

    Tips for debt consolidation

    While taking out a debt consolidation loan can help reduce the interest you pay and better manage your repayments, it’s up to you to make the most of your debt consolidation efforts. The following are some useful tips you can take on to help your debt consolidation loan work best for you:

    • Work out a debt management plan. If you’re in a position where you need to enter a debt agreement with your creditors, it’s important to agree to a plan that is manageable for you. These agreements are informal and can be worked out between you and your credit provider. If you choose to take out a debt consolidation loan, be sure of the debt management plan you’re getting into.
    • Use a budget. Budgeting your debt consolidation repayments ensures that they will remain manageable over the term of the loan. How much will you need to pay each month to ensure your debt is paid off? Work your loan repayments into your budget before you take out the loan.
    • Compare your options. Make sure you take a look at all the options available to you before you apply for a debt consolidation loan. Are you applying for the most competitive option available? Ensure that you compare fees, rates and any additional features to see if you’re getting the best option available to you.
    • Make extra repayments. If your loan allows for it, making additional repayments can help see your loan paid off sooner and save interest. Make sure you won’t be charged fees for additional repayments, lump-sum payments or early repayment penalties depending on how you plan to repay your loan. If you find you’re saving considerably on interest from consolidating your debt, make sure to put those savings back into your loan.
    • Look for ways to cut down on your expenditure. Are there any ways you can cut down on your outgoings? By cutting down your expenditure you can have more money to make additional repayments, the benefits of which are explained above. Ensure you’re in a safe position to manage your repayments and pay back your debts.

    Frequently asked questions about debt consolidation

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