When it comes to financing your purchases or fulfilling your immediate financial needs, you may come across various loan options available in the market. Two popular choices are Consumer Durable Loan and Small Personal Loan. While both serve a similar purpose of providing financial assistance, they have distinct characteristics and features.
Understanding the differences between Consumer Durable Loans and Personal Loan is crucial to make an informed borrowing decision. Keep reading to get a comparison of Consumer Durable Loan vs Small Personal Loan.
What is a Consumer Durable (CD) Loan?
A Consumer Durable Loan is a type of loan that you can take to
buy consumer durable products like appliances or gadgets. These
loans allow you to buy appliances or gadgets now and pay for them in
affordable EMIs over a short time.
Typically, CD loans are
collateral-free, but some lenders do provide consumer durable loan as
secured loans. Therefore, it is important to learn the lender’s
policies first before applying. A few lenders like Poonawalla Fincorp
also offer EMI Card to facilitate the purchase of consumer durables.
What is a Small Personal Loan?
A Small Personal Loan is a type of loan that does not require you to provide any collateral or security. It is designed to help you with a smaller amount of money to meet your immediate financial needs and can be used for different purposes like paying medical bills, covering education expenses, financing a wedding, consolidating debt, etc.
These loans depend on factors like your income, creditworthiness, and the policies of the lender. Additionally, a Small Personal Loan comes with short repayment tenures and fixed or variable interest rates, depending on the lender you choose.
Consumer Durable vs Small Personal Loan
The following table provides a comparison of Consumer Loans vs Small Personal Loans:
| Parameters |
Consumer Durable Loan | Small Personal Loan | |
|
Use |
Limited to purchasing large electrical goods and consumer durables. |
Can be used for multiple purposes. | |
| Collateral | May or may not be required, depending on lender policies. |
Usually does not need collateral. | |
| Loan Amount |
| Ranges from ₹50,000 to ₹5 Lakh. | |
| Repayment Tenure |
Shorter, up to 24 months. |
Ranges from 3 months to several years. |
Benefits of Consumer Durable Loan
Now that we know what a CD loan is, let us look at a few of its benefits:
- Attractive Interest Rates: Many lenders provide Consumer Durable Loans at low interest rates. This makes it a cost-effective choice for individuals seeking to finance significant consumer durables without incurring additional interest charges.
- Lower Foreclosure Charges: When it comes to Consumer Durable Loan, the charges for closing the loan before the designated period are lower compared to other loan types.
- Minimal Documentation: Unlike other loan types, Consumer Durable Loan has a simplified documentation requirement. This means you need to provide minimal paperwork when applying for the loan. As a result, the loan application process becomes quicker and more convenient for borrowers.
Benefits of Small Personal Loan
Here are the benefits of a Small Personal Loan:
- Collateral-Free Loan: One of the key advantages of a Small Personal Loan is that you can obtain it without having to provide any collateral. You neither have to offer any guarantee nor worry about your assets being seized if you fail to repay the loan.
- Nominal Processing Fees: Many lenders offer Small Personal Loans with a minimal processing fee as low as 4.5%.
- Flexibility in Usage: Whether it is for a wedding or to consolidate debt, a Small Personal Loan can be used for anything. It can also come in handy when you need immediate cash to fund emergencies, such as rent, medical expenses, etc.
ALSO READ :- 4 Factors That Make Small Personal Loans A Viable Borrowing Option
To Conclude
The choice between a Consumer Durable Loan and a Small Personal Loan depends entirely on the purpose for which you seek these funds. it is crucial to borrow responsibly, ensuring that you can comfortably repay the loan within the agreed-upon terms. By making informed decisions and managing your finances wisely, you can leverage the benefits of these loan options to achieve your financial goals and aspirations.
Frequently Asked Questions
1. What is the main difference between a Consumer
Durable Loan and Small Personal Loan?
A Consumer
Durable Loan is specifically designed to help you purchase household
items like appliances, electronics, or furniture. A Small Personal
Loan, on the other hand, offers more flexibility and can be used for
any personal expense, such as medical bills, travel, or education.
2. Is a Consumer Durable Loan a good
option?
If you need the money to purchase electronic
gadgets or appliances, a consumer durable loan can come in handy as
it offers good loan amounts, competitive interest rates, and
flexible repayment tenures.
3. Can I get a Consumer Durable Loan for any product
I want?
No, consumer durable loans are restricted to
select items like smartphones, TVs, refrigerators, washing machines,
etc., from partnered retailers.
4. Can I apply for these loans online?
Yes, lenders like Poonawalla Fincorp offer both consumer durable
loans and small personal loans through online platforms for easy
application and quick disbursal.