Consumer Durable Loans: A Quick Guide

Whether you are relocating to a new home or you desperately need to upgrade your gadgets, paying such hefty amounts upfront may seem out of your budget. But with consumer durable loans, you can now buy everything on your Wishlist without straining your savings or waiting for months. A quick and hassle-free instant finance option, consumer durable loans enable you to upgrade your lifestyle with easy monthly EMIs. It is a low-interest loan product that requires minimal documentation and is processed within minutes.
 

What is a consumer durable loan?

 
Consumer durable loans are the most common types of personal loans available for purchasing household goods or items such as laptops, smartphones, and so on. These loans usually have a short repayment tenure and are very affordable when compared to other loan products in the market. The majority of consumer durable loans are offered with no-cost EMIs, making them a very attractive option.

Benefits of Consumer Durable Loans

 
Applying for consumer durable loans provides you with multiple perks. These are –
 

• Attractive Interest Rate

  Most financial institutions offer zero-interest consumer durable loans. It means that the amount you repay each month does not include any interest. However, there is a catch. The Reserve Bank of India prohibits financial institutions from offering no-cost EMIs. So, what does this mean? Most financial institutions charge a processing fee and other documentation fees on consumer durable loans, which are either included in the EMI or must be paid at the time of the down payment.
   

• Quick Disbursement

  While other loans may take a day to a week to disburse funds, and some may even take months, consumer durable loans are approved within minutes. The reason for this quick approval and disbursal of funds is the need for fewer documents as in consumer durable loans the loan amount is considerably small.
   

• Flexible Tenure

  Consumer durable loans are available for terms of three to sixty months. However, the tenure may differ depending on the lender. The flexibility in tenure allows you to choose the loan amount whose EMI best fits your budget.
   

• Build Credit History

  If you have never availed a loan before, your credit report will show your credit score as 'NA,' which stands for not applicable. If you apply for a large sum of money in this situation, the lender may deny your request. The best way to get started is to take out a consumer durable loan, repay it on time, and establish a positive credit score and history.
   

Also Read: What is a Down Payment? Here Are Some Points You Need to Know
 

Eligibility Criteria for Consumer Durable Loans

 
There isn't much of a distinction between personal loan eligibility criteria and consumer durable loan eligibility conditions. Most lenders will typically require you to meet the requirements outlined below.
 

Parameters	Description
Residential Status	Resident Indian
Minimum Age	21 Years
Maximum Age	58 Years
Occupation Status	Salaried or Self-Employed Individuals
Work Experience	Six months of work experience for salaried workers. Two years of experience for self-employed individuals.

 

What are the documents required for a consumer durable loan?

 
Consumer durable loans are known for their prompt and hassle-free disbursement. The primary reason for this is that minimal documents are required to fulfil the eligibility criteria for this loan. The customer or borrower needs to submit the KYC along with income proof for the last six months and that’s all that’s needed.
 
Here are the specifics for the same.
 

Parameters	Description
Identity Proof	Aadhar Card Passport Voter ID Pan Card
Address Proof	Ration Card Utility Bills Passport Registered Rent Agreement
Income Proof	Form 16 Recent Salary Slips Latest ITR Six Months Bank Account Statement Financial Statements
Other Documents	Passport Size Photographs Application Form

 

How to apply for a consumer durable loan?

 
Applying for a consumer durable loan is very simple. Let’s assume you want to buy a laptop. You go to the XYZ dealership to finalise the laptop. At the shop, you will notice executives from various financial institutions. 
 
You only need to submit your KYC and income certificate to any of the lender's executives. After that, they will immediately upload them to their database, run a quick credit check, and the funds will be transferred to the account of the dealership from which you purchased the laptop.
 
You can apply for a consumer durable loan online through the lender's website as well. When purchasing through an e-commerce platform, you will also find an EMI option.
 

When is the best time to apply for a consumer durable loan?

 
Consumer durable finance is a type of multi-purpose loan. You can use them to buy any household electronic appliance, smartphone, or expensive gadget. Here is the list of the most common situations when people apply for this loan.
 

• Moving to a new house

  When you buy a new home and move in, you will need to furnish it with various appliances, such as a modular kitchen, washing machine, air conditioners and  other necessary items. But since purchasing a new home is an expensive endeavour, paying for furnishings right away may be straining your budget. In this case, consumer durable loans come in handy.
   

• Replacing current appliances

  Every electronic product has a shelf life. For example, your smartphone may last up to 4-5 years, whereas a washing machine typically lasts ten years, and so on. If any of your high-end appliances have stopped working suddenly, you may require this loan to pay for such unplanned expenses.
   

• Gifting for different occasions

  Consider consumer durable loans rather than paying the entire amount upfront if you wish to gift a home appliance to a friend or close relative at their wedding, anniversary, birthday or festival. It could be a watch, laptop, mobile, or any other high-end gadget that you can buy using this loan.
   

Also Read: What is No-Cost EMI and Does it Work to Your Benefit?
 

Considerations to make when applying for a consumer durable loan

 

• Calculate the total cost of the product, including GST and shipping charges, to determine the exact amount required.
• Maintain a healthy credit score to qualify for a low-interest rate consumer durable loan.
• Compare different lenders' processing fees and other associated charges if the lender claims to offer no-interest EMI.
• Always use an EMI calculator to choose the repayment term wisely, as it has a direct impact on the EMI and the amount of interest payable.

 

To conclude

 
Consumer durable loans allow you to upgrade your lifestyle with the latest home appliances equipped with a plethora of high-tech features while staying within your budget. This loan is notable for its minimal documentation, simple eligibility requirements, and instant disbursement. If you intend to purchase multiple home appliances or high-end gadgets, you might consider availing a consumer durable loan.