Can I use the loan for debt consolidation?
Yes! Debt Consolidation is a Smart Use of Personal Loans
What is Debt Consolidation?
Combining multiple debts (credit cards, other loans) into one single loan with a lower interest rate.
Benefits:
- Lower Interest Rate: Personal loans typically have lower rates than credit cards
- Single Payment: One monthly payment instead of multiple
- Fixed Term: Clear payoff date (unlike revolving credit)
- Credit Score: Can improve credit utilization ratio
Example:
| Debt Type | Balance | Rate | Monthly |
|---|---|---|---|
| Credit Card 1 | €5,000 | 19.9% | €150 |
| Credit Card 2 | €3,000 | 22.9% | €100 |
| Other Loan | €4,000 | 15% | €120 |
| Total Before | €12,000 | - | €370 |
| OCBC Loan | €12,000 | 5.99% | €230 |
Savings: €140/month and thousands in interest over the loan term!
