Consumer Durable Loan- How To Avail The Benefits?
A consumer durable loan is a kind of loan given to an individual for the purchase of any durable item. Consumer durable loans are unsecured and short-term loans that can be paid off in specified EMIs over a particular tenure.
These loans are different from other types of loans as these are solely used to buy any durable commodity, like a home theatre system, some smart gadget, or upgrade the home with the latest furnishings.
What do the lenders look for before approving a consumer durable loan?
As a person applies for a consumer durable loan, before approval, the lender evaluates a few things, these include, repayment history of the individual and his CIBIL score.
A CIBIL score can be defined as the credit score of an individual, it is a three-digit number and a summarized version of the credit history and credit profile of the person.
It is formulated on the basis of the past loan and repayment pattern of the person as it is shared by the lending institutions and banks.
The CIBIL score can vary between 300 and 900, and with scores closer to 900, the chances of loan approval are higher as a higher CIBIL score indicate a good credit history.
To avail of such loans easily, one should maintain a good CIBIL score and credit history.
How to apply for consumer durable loans?
The application process for consumer durable loans is very simple. Since these are loans granted for the purchase of any durable household item, one first needs to select the item that is to be purchased.
Then the applicant has to check his or her eligibility online in the app through which the loan is being applied and enter his or her mobile number for OTP-based verification.
Next, the required documents have to be uploaded and the details are to be filled out.
As the loan gets approved, the applicant can visit the representative of the lending company at the nearest store and do the necessary processing for the purchase of the product.
Eligibility criteria for consumer durable loans:
Consumer durable loans come with the most simplified and minimal eligibility criteria. The applicant has to be of the age of 21 years and above.
In the case of a salaried individual, the upper age limit is 60 years and in the case of a self-employed person, the upper age cap is 65 years.
The person applying for the loan can be salaried as well as self-employed, the only condition is the availability of a steady and regular source of income.
Requisite documentation:
Consumer durable loans require the least number of documentations, the loan applicant needs to provide proof of identity, which can be anything like an ADHAR card, driving license, passport, voter ID card, or Job ID card issued by NREGA.
The applicant also has to provide address proof, for which any of the above-mentioned documents for identity proof is acceptable.
Other than the above-mentioned documents one can also provide any deemed OVD, an OVD is an Officially Valid Document and includes a property or tax receipt of the municipality, utility bills like telephone bills, electricity, piped-gas or postpaid mobile bill, however, the bills cannot be more than 2 months old.
Such documents also include a pension order or a family pension payment order and an allotment letter of accommodation from one’s employer.
Which items are eligible to be purchased using consumer durable loans?
Consumer durable loans can be used for the purchase of a number of items like air conditioners, televisions, fridges, washing machines, microwave ovens, kitchen appliances, mobiles, tablets, cameras, audio devices, laptops, and many other electronic and household appliances.
Interest and charges:
The rate of interest and charges on consumer durable loans can vary from one lender to another. However, on average, the rate of interest floats between 12% to 22%, during promotional offers some lenders can even offer 0% interest rates.
For the processing fee, 1–3% of the loan amount is charged on average by most f the lenders.
Terms of repayment of the loan:
A consumer durable loan typically comes with a repayment tenure ranging between 8 months to 36 months, however, certain lenders can have options of smaller repayment tenure like 3 or 6 months.
The borrower can also avail of the option of foreclosing the loan at any point in time. But it is important to note that the condition of foreclosure can vary from one lender to another.
It can vary anytime starting from the first EMI up until the sixth month of the loan approval.
Usually, charges are not levied by the majority of lenders in case the borrower wants o to foreclose the loan, even if they do, it can be as low as 2–4% of the outstanding due amount.
It is advisable that the borrower gets in touch with the lender and discusses the terms of foreclosure of the loan before applying for the loan.
Things to consider:
While taking a consumer durable loan, it is better to compare between a number of lenders to decide which one offers the best terms for the loan like rate of interest, foreclosure provisions, tenure, and select a loan that is best for his/her interest. Alternatively, one can opt for small consumer durable loans through any instant loan app.
