September 29, 2018
What is the first thing that comes to your mind when you hear the word “Loan”? It is to fulfil your huge financial needs. Isn’t it? It is so because most of us think that for all the smaller ones we can pay using our savings or our credit card. Consumer durable items like a Television, Air condition, expensive smartphone or even a microwave oven, are a few of those small needs. If you are buying one thing at a time, you may not feel the pinch. What if you need to buy all these items at once? This is where Consumer Durable Loan comes handy.
We all look forward to upgrading our lifestyles, and such financing schemes enable us to buy products that can help us make our lives easier and leisure more enjoyable. Washing machines to save you from the chores of washing clothes or a big LCD screen TV to watch your favourite sport or movie or being at home in the comfort of the air-conditioned room, not everyone has ready cash to pay for these. Consumer Durable Loan is a finance option offered by banks and non-bank financial company to help us in upgrading our lifestyles.
Well, many of us might consider using your credit card to make purchases of consumer durable goods. However, such credits have a considerable cost attached to it, and that is the reason people apply for a loan to buy consumer durable items.
Making purchases on your credit is like a “cycle of debt”, in which you keep going round and round. It is very easy to get lost in the vicious cycle. On the other hand, in case of Consumer Durable Loan, we get the lump sum amount at one time. And like other loans, we need to pay back in fixed periodical instalments. The EMIs help us in keeping track of repayment, and we become loan free as planned. Additionally, the interest rate on such loans ranges between 15% - 20%, which is much lesser than the credit card interest rates of 20% - 24%.
Not just that, there are a lot of other benefits of taking a Consumer Durable Loan.
- Flexible amount
The amount of the loan depends on your requirements. The amount granted by banks or NBFCs is usually calculated based on the applicant’s credit score and his/her ability to pay back the loan. Well, you can always negotiate with the lender.
- Short tenure
Unlike other loans, it is not huge. That means the tenure of the loan is also shorter. The loan tenure often ranges between 12 months to 60 months. Well, shorter tenure loan is easy to pay in EMIs.
- Best to build a credit score
In a way, you can call Consumer Durable Loan a type of personal loan, so it is the best way to build a strong credit score. Timely payment of EMIs, without pre-payments or defaults, helps in making your credit score better and it is definitely good for you in the long run.
Cons of a Consumer Durable Loan:
Just like any other option, such loans also have its own setbacks.
- There are cash discounts available for making full payment at the time of purchase, which you lose out on.
- There are hidden costs to the loan like processing fee and repayment fee. So make sure you do your research before getting into it.
With banks and NBFCs in India, it has now become easy to apply for Consumer Durable Loan. So, apply for a loan now!