Convert Unsecured Debt Into Lower Cost Term Loans, Invest News & Top Stories


Singapore citizens and permanent residents with past due unsecured debt – these include credit card loans and other non-credit lines – can get help under the new measures.

The special (unsecured) financial assistance program allows banks and card issuers to help borrowers who have suffered a temporary loss or decline in income and who have difficulty repaying during the pandemic.

The program – a collaboration between the Monetary Authority of Singapore and the financial industry – gives them the ability to convert their high-interest unsecured credit card and revolving balances into a lower-cost term loan.

Eligible borrowers can join the program by providing proof that their income has been reduced by at least 25% after February 1.

Their refunds must be 30 to 90 days past due at the time of the request.

The new term loan will have an effective interest rate capped at 8% for a period of up to five years. There will be no prepayment penalty and it will not be reflected as a restructured loan on the borrower’s credit bureau report.


Q Do I have to request the conversion of my outstanding unsecured debt into this term loan?

A Before taking out this term loan, determine if there are other credit products offered by banks and other credit card issuers, such as balance transfer, interest-free monthly payment plans, or plans. debt consolidation plans, which can help you lower your overall interest and pay off your debts. .

Whichever option you choose, it is important to make sure that you are able to meet the monthly payments in full to avoid the accumulation of debt.

Q What types of unsecured credit facilities are covered by the initiative?

A It covers higher cost credit cards and revolving credit facilities. Non-revolving personal loans, such as home improvement loans, and secured credit facilities such as auto loans and mortgages, will not be included.

Q What if I am unable to repay my term loan?

A You may be charged late fees and interest charges if you do not pay back on time. Talk to your lenders to explore your options, and they may be able to help you restructure your repayments.

Q Can I convert my revolving unsecured credit balances multiple times into term loans?

A The conversion can only be done once with one lender.

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