If you have visited a brick-and-mortar store recently or even hopped on to your favorite eCommerce site to buy an item, a common option you would have seen is to pay the price for the product in EMI or Equated Monthly Installments. These days, no matter the type of product you are availing, if its net cost goes over ₹10,000 and in some cases even ₹5000, chances are that you can avail a loan on it.
These type of short term loans are known as consumer durable loans in the world of finance, and if you find yourself among the turmoil of noticing them multiple times but knowing very little about them, this article is for you, as we will be covering everything you need to know about consumer durable loans in India, in today’s issue.
What Is a Consumer Durable Loan?
In simple terms, a consumer durable loan can be understood as a type of personal loan you can avail to buy products and items from either brick and mortar establishments or eCommerce stores. Typically these loans have an upper limit of upto ₹5 lakhs, and although this can vary between lenders, they generally arrive with an interest rate of 0%. Due to this, most lenders advertise these instruments as being a no-cost EMI option.
Repayment of most consumer durable loans in India extends all the way from a few months to 5 years (60 months) depending on the lender of your choice, and similar to a personal loan, they also require you to submit minimal documentation and come with quick and instant disbursal.
Eligibility Criteria of Consumer Durable Loans
Although the exact eligibility criteria of consumer durable loans tend to vary between lenders, the main constituents remain the same, and they are as mentioned below.
- Applicants need to be between the ages of 21 years and 68 years.
- Must have a minimum income of ₹15,000 per month in case of a salaried employee with a current professional experience of 2 years at a minimum.
- Must have a minimum of ₹20,000 per month in case of a self-employed professional with a business vintage of two years at a minimum.
- Must be a permanent resident of India.
- Must have eKYC documentation, that is, Aadhar Card, PAN Card, or Driving License.
Types of Consumer Durable Loans
Similar to other traditional lending instruments, a consumer durable loan also arrives in a wide variety. Some of the most significant ones are as mentioned below.
- Fixed Interest Rate Consumer Loans
The first and most popular type of consumer loan is a fixed interest consumer loan, and as the name implies, in this type of loan, the rate of interest remains fixed throughout the tenure of the loan. The interest rate being charged is pre-mentioned in the loan documentation, and till the tenure is complete, the consumer needs to pay the same EMI amount every month.
2. Variable Interest Rate Consumer Loans
The second type of consumer loan available in India is a variable interest rate consumer loan. Unlike a fixed interest rate consumer loan, the rate of interest in a variable consumer loan keeps changing from time to time, either depending on the market conditions or a reducing balance basis. In either of these cases, the EMI amount of the loan generally tends to vary between months, and although this system is not so popular, it can be found in some instances.
3. Secured Consumer Loans
In simple terms, a secured consumer loan can be understood as a type of consumer durable loan in which you are required to pledge any asset or collateral in order to avail of the loan amount. Generally applicable in instances where the loan amount is considerably high, secured consumer loans generally arrive with a higher rate of approval and also lower interest rates since, in this scenario, the risk for the lender is significantly less.
4. Unsecured Consumer Loans
Last but not least is an unsecured consumer loan, and as the name suggests, in this type of consumer loan, you do not need to pledge any asset or collateral to avail of its services. The lender simply checks your credit score and, based on that, your loan is approved or rejected. Generally, an unsecured consumer loan arrives with a higher rate of interest, and if you have a low credit score, a lower chance of approval.
Key Features of Consumer Durable Loans
Some of the most significant features of consumer durable loans include:
- Instant Approval
Since these loans typically require minimal documentation and collateral, the lender instantly checks your eligibility and approves your application.
2. Flexible Loan Amount
The loan amount in most consumer durable loans stretches all the way from ₹10,000 to ₹5 lakhs, thus covering a wide spectrum of products and services.
3. Flexible Tenure
Most consumer durable loans arrive with flexible tenures ranging all the way from 6 months to 36 months.
4. Minimal Documentation
Almost all consumer durable loans have a completely online application process, thus entailing that the customer needs to submit minimal documentation and skip all the hassle associated with a traditional loan application.
5. Competitive Interest Rate
Due to the wide presence of lenders, consumer durable loans offer some of the most competitive interest rates in the market.
How To Apply For a Consumer Durable Loan?
There are two ways of applying for a consumer durable loan, and they are as mentioned below:
- Offline Process
- Visit a brick-and-mortar store near you and enquire about the facility of a zero cost EMI.
- If available, enquire about the eligibility criteria and application process.
- Submit your documents, fill out the application form and share your bank details.
- Once approved, you will be able to purchase the product, and EMIs will be automatically deducted from your bank account.
2. Online Process
- Login to Google PlayStore and search for the term “personal loan or consumer durable loan.” You will come across a list of various plunders which offer this service.
- Select a lender of your choice and visit their website.
- Initiate the application process by first sharing your Aadhar linked mobile number.
- Share the OTP you just received with the lender and proceed with the application by sharing your personal information, which includes your full name, email address, Aadhar Card Number, PAN Card Number, etc.
- Share your income information with the lender, as in salaried or self-employed, followed shortly by uploading your income certificates as proof.
- Enter the loan amount you require, fine-tune the repayment cycle and complete your application.
Conclusion:
The wide presence of consumer durable loans has not only made it immensely easy for the average consumer to purchase items they need but has also made it easier to manage one’s personal finances. Now that you know of the process to apply for a consumer loan go ahead and apply for one today.
