Consumer Durable Loan
5paisa Research Team
Last Updated: 09 Feb, 2024 10:34 AM IST
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Content
- What is a Consumer Durable Loan?
- Types of Consumer Durable Loans
- Key Features of Consumer Durable Loan
- Benefits of Consumer Durable Loan
- Eligibility Criteria for Consumer Durable Loan
- Self-employed Professionals:
- Documents Required for Applying for Consumer Durable Loan
- Rate of Interest Offered by Top Banks on Consumer Durable Loan
- Fees & Charges on Consumer Durable Loan
- How to Apply for a Consumer Durable Loan?
- Factors Affecting Consumer Durable Loan Interest Rate
- Conclusion
Are you embarking on a fresh chapter after tying the knot and aiming to furnish your new abode? Are you seeking to elevate your living space with a state-of-the-art home theatre or acquire the latest gadgets? A consumer durable loan presents the solution you need. Enjoy the flexibility of acquiring up to 100% financing for your desired products, with the added convenience of repaying through affordable EMIs.
This specialised form of personal loan caters specifically to the acquisition of electronic devices and household appliances, encompassing smartphones, televisions, gaming consoles, home entertainment systems, laptops, cameras, washing machines, modular kitchens, and an array of other essentials.
Continue reading to learn more about Consumer durable loan meaning in detail.
What is a Consumer Durable Loan?
As per Consumer durable loan meaning, it facilitates significant purchases with manageable payments, allowing you to address immediate needs that you've deferred for the future. These loans are specifically designed to finance the acquisition of household appliances, personal devices, and other essential items commonly found in households. Typically, consumer durable loans cover a wide range of frequently used appliances and gadgets.
Through a consumer durable loan, the borrower has the option to spread the cost of the appliance purchase over a period spanning from six to twenty-four months. Rather than waiting months or even years to save up for your desired gadget or appliance, you can seize the opportunity to make your purchases today and repay them through convenient EMIs over the subsequent months.
Types of Consumer Durable Loans
Now you know what is consumer durable loan. Here are the types of this loan:
• Installment Loan:
The availability of these loans and their terms depend on the lender and prevailing market conditions. They may come with either a fixed or variable interest rate. Repayment options include weekly, bi-weekly, monthly, or quarterly instalments. Additionally, no security or collateral is necessary to secure this mortgage.
• Credit Card:
Another type of consumer durable loan commonly utilised by customers for purchases is a credit card. With pre-approval, cardholders can make purchases without concerns about their financial situation.
Key Features of Consumer Durable Loan
• Consumer durable loans are categorised as high-cost credit due to their very high interest rates, which are determined based on your total income and other financial records.
• The majority of consumer durable loans are approved within 24 hours, with some instant loans receiving approval in as little as 10 minutes.
• The borrowing limit for consumer durable loans typically ranges from Rs. 5,000 to Rs. 5 lakhs.
• Consumer durable loans are short-term financial products, as they are typically repaid within 36 months or less.
Benefits of Consumer Durable Loan
• To apply for a consumer durable loan, you must access an online portal and provide your personal information. There's no need to visit a bank or any other financial institution.
• Utilising an online loan portal typically results in an approval decision in less than 60 seconds.
• Repayment of the loan can be achieved through fixed monthly instalments over a predetermined period.
• No collateral is required as security for the loan.
Eligibility Criteria for Consumer Durable Loan
• Age: Minimum 21 years and Maximum 65 years
• Minimum Monthly Income: Rs. 15,000
• Experience in the current organisation: Minimum one year
Self-employed Professionals:
• Age: Minimum 21 years and Maximum 68 years
• Minimum Income: Rs. 1.5 lakh
• Employment Stability: At least two years in the current business
Documents Required for Applying for Consumer Durable Loan
Below are the typical documents needed to apply for a consumer durable loan:
◦ Completed application form accompanied by passport-sized photographs
◦ Proof of Identity: Aadhaar Card, PAN Card, Driver's License, Voter ID, or Passport
◦ Proof of Address: Aadhaar Card, Passport, Bank Account Statement, Lease Agreement, Property Purchase
Agreement, Utility Bill (dated within the last three months), or Driver's License
◦ Proof of Income:
a. For Salaried Individuals: Salary Slips, Bank Account Statement, or Form 16
b. For Self-Employed Individuals: Bank Account Statement, Previous Year Income Tax Return (ITR), Profit & Loss Statement, and Balance Sheet
◦ Any additional documents requested by the lending institution.
Rate of Interest Offered by Top Banks on Consumer Durable Loan
Here's the interest rate on consumer durable loans provided by top lenders.
Company | Rate of Interest | Loan Amount |
SBI Debit Card EMI & Online EMI | 18.30% |
Up to INR 20 lakh |
Federal Bank - Debit Card EMI | 14% to 15% onwards | Up to INR 1.5 lakh |
HDFC - Debit Card EMI | 16% to 20% | Up to INR 5 lakh |
Axis Bank - Pre-approved EMI on Debit Card | 14% onwards | Product-based |
CICI Bank - Consumer Finance | 8.72% to 29.27% | Product-based |
IDFC First Bank - Consumer Durable Loan | 9.5% to 36% | Up to INR 5 lakh |
Kotak Mahindra Bank - Smart EMI | 17.01% (IRR) | Up to INR 15 lakh |
Bajaj Finserv - Insta EMI Card | Nil | Up to INR 2 lakh |
Tata Capital - Consumer Durable Loan | Nil | Up to INR 5 lakh |
L&T Finance - Consumer Durable Loan | 12% onwards | Up to INR 7 lakh |
Fullerton India | Contact Lender | Up to INR 30,000 |
Fees & Charges on Consumer Durable Loan
Bank | Charges |
HDFC Bank | Rs. 749 + GST |
SBI | Nil |
Bajaj Finserv | Rs. 749 for smartphones and laptops, and Rs. 767 for cameras |
IDFC First | As applicable at the time of loan agreement execution |
Tata Capital | Rs. 0 to Rs. 10,000 |
IndusInd Bank | Nil |
Fullerton India | Nil |
How to Apply for a Consumer Durable Loan?
Once you've confirmed your eligibility, proceed with these simple instructions to apply for a consumer durable loan:
1. Visit the website or app of your chosen financial institution and select the "Apply Now" option.
2. Enter your mobile number to complete the OTP verification process.
3. Fill in your personal and professional information.
4. Upload the required documents as requested.
5. Upon approval of your consumer loan application, a representative from the bank will contact you directly for additional verification.
Factors Affecting Consumer Durable Loan Interest Rate
Below are several crucial factors that impact the interest rate applied to an individual:
• Credit Score: The credit score, a 3-digit numeric representation of one's credit report or history, typically ranges from 300 to 900. A higher score, such as 750 or above in the case of CIBIL score, enhances the likelihood of securing a consumer durable loan with favourable terms, including a lower interest rate, reflecting greater creditworthiness.
• Loan Amount: Higher loan amounts often result in the applicant being subject to a higher interest rate. This is because larger loan amounts typically entail higher monthly instalment payments, increasing the lender's risk of default.
• Loan Tenure: Longer repayment periods usually correlate with higher interest rates, while shorter tenures tend to attract lower rates.
• Current Outstanding Debt: Applicants with substantial existing debt may face a higher interest rate on consumer loans, as this raises concerns about the borrower's ability to manage additional financial obligations, increasing the lender's risk.
Conclusion
Using a consumer durable loan, you have the flexibility to acquire the latest appliances and gadgets immediately, deferring payments for later. With repayment periods spanning from 6 to 36 months, you can manage the loan through budget-friendly EMIs. These loans offer a savvy solution to acquiring items that might otherwise strain your finances. With streamlined documentation, swift approval, and competitive interest rates, consumer durable loans represent the optimal choice for enhancing both your home and lifestyle.
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Frequently Asked Questions
The minimum CIBIL score to avail of the consumer durable loan is above 700.
Many lenders offer financing up to 100% of the product price when disbursing a consumer loan. However, in some instances, the financing may cover only 80% to 90% of the product price. In such cases, the remaining 10% to 20% needs to be paid by the customer through a down payment made at the time of purchasing the product.
The repayment period for consumer durable loans depends on your convenience, and you may choose between 6, 12, 24, and 36 months.
Personal loans provide flexibility for various financial needs, such as medical expenses, home renovation, and debt consolidation. On the other hand, consumer durable loans are a specific type of personal loan designed for purchasing durable products like household appliances and electronic gadgets. While both fall under personal loans, consumer durable loans are often more affordable, typically offering low or 0% interest rates and nominal processing fees.
The borrower's account enters default if they cease making loan payments. Penalties, interest fees, and other costs can go up as a result. Negative effects will also be felt on your CIBIL score.
Consumer durable loans on debit cards usually do not require consumers to pay a down payment. However, it's important to note that in-store purchases may be subject to a down payment requirement depending on the terms and conditions of the specific loan agreement.
Some financial organisations offer Consumer Durable Loans to first-time borrowers without a credit history. You have to review the loan provider's terms.
Indeed, you are always free to foreclose on the debt at any moment. All lenders have different timelines for foreclosure, though, with some starting after the first EMI and others ending six months after the loan disbursement date.
When your application for a consumer durable loan is approved, the money is often sent straight into the seller's account.