Key Things to Know Before You Apply for a Consumer Durable Loan

A Consumer Durable Loan offers a convenient way to fund the purchase of household appliances, gadgets and other electronics and repay with EMIs. However, before you apply for one, some of the key things to be aware of include the benefits it offers, what influences your EMIs and interest rates, and, of course, the eligibility criteria. Continue reading this blog to learn about all the things you need to keep in mind when applying for a Consumer Durable Loan and make an informed decision.

Key Things to Know Before Availing Consumer Durable Loans
 

1. Understand All Costs, Not Just the Interest Rate
Several consumer durable loans grab consumers with benefits like ‘No-Cost EMIs’ or zero-interest offers, where you do not pay any interest. However, it is important to note that other charges, like a one-time, non-refundable processing fee, are standard. Request a detailed cost breakdown to know the full amount payable before signing up.

In addition, ensure you fully understand how your No Cost EMI would work, particularly on electronics where your tenure could outlast your product’s performance. In some cases, the final product cost with a ‘No Cost EMI’ payment option could be inflated to cover for the lost interest; you may just get a better deal with regular EMIs and interest.

Also Read: No-cost EMI: Meaning, How It Works, and Is It Good or Bad?

2. Check Your Eligibility and Required Documents
Consumer durable loans are known for their efficiency, offering practically instant approval. However, before you get there, you must meet the lender’s eligibility criteria. In general, to qualify, you must be an Indian citizen and show evidence of a stable income stream. The basic requirements are usually as follows:

●    Age: Between 21 and 65 years.
●    Income: INR 15,000 per month for salaried individuals or INR 1.5 Lakh per annum for self-employed individuals. This number varies from lender to lender.
●    Documents: You must submit basic KYC documents, including PAN and Aadhaar, along with evidence of income such as payslips or bank account records.

Also Read: 6 Benefits of a Consumer Durable Loan You Probably Didn’t Know

3. Understand Factors That Influence Your Loan Terms
It can help to understand the terms of your loan before applying, since they aren’t the same for everyone. Lenders look at several factors to assess your application:

●    Credit Score: A higher credit score (ideally 700 or above) demonstrates responsible borrowing behaviour and can help you get better terms.
●    Income Stability: Having a stable job and a consistent income assures the lender of your ability to repay the loan on time.
●    Existing Debt: If you already have multiple ongoing loans or high credit card bills, a lender may see you as a higher risk.
●    Lender Policies: Each financial institution has its own internal policies and risk assessment rules that can affect your final loan offer.
●    Store Relationship: Depending on who your retailer is and the lender they are enrolled with, you may receive curated offers, special product pair-ups and other preferential terms if you’re an existing customer.

4. Keep the Key Benefits in Mind
Understanding the advantages can help you decide if this is the right option for you. A Consumer Durable Loan offers several key benefits:

●    Instant Access: You can purchase the appliance or gadget you need immediately without waiting to save the full amount. Plus, the entire amount is disbursed to the retailer instead of to you, removing the responsibility of having to manage a large sum of money.
●    Up to 100% Financing: Many lenders offer to finance the entire cost of the product, meaning you won’t have to make any down payments.
●    Flexible Repayment: You can choose a repayment tenure that fits your budget, with options typically ranging from 3 to 24 months, making EMIs more manageable.
●    Minimal Documentation: The application process is designed to be simple, requiring only standard KYC and income-related documents.
●    Builds Credit History: Paying your EMIs on time is a great way to build a positive credit history, which can help you secure larger loans in the future.

Also Read: Smart Spending: Examining the Pros and Cons of Laptop EMI Plans

To Conclude

Getting a Consumer Durable Loan is a great way to upgrade your lifestyle without breaking the bank. By being aware of the costs involved, the benefits that are on offer, and your eligibility before applying, you can make wise financial decisions.

Apply for a Consumer Durable Loan from trusted lenders like Poonawalla Fincorp to get the best rates with a transparent process and minimal documentation. 

Frequently Asked Questions

Does a Consumer Durable Loan affect my CIBIL score?
Yes, it does. Like any form of credit, your loan and repayment history are reported to credit bureaus, which directly impacts your CIBIL score. Timely payments can help improve it, while missing payments damages it.

Can I close my Consumer Durable Loan early?
Yes, most lenders allow you to foreclose or prepay your loan. However, you should check your loan agreement for any prepayment penalties or charges that may apply.

Is a down payment always required for consumer durable loans?
Not always. While some loans may require a down payment (especially if you’re purchasing something extravagant), some lenders and retailers offer 100% financing or ‘zero down payment’ schemes on select products.

What is the typical repayment tenure for a Consumer Durable Loan?
The repayment tenure is usually flexible, ranging from 3 months up to 36 months. This allows you to choose an EMI plan that fits comfortably within your monthly budget.

Can I get a loan for any product I want?
Consumer durable loans are meant for specific categories like home appliances, electronics, and gadgets. The loan can generally be used for most major brands and products available at partner stores.

How quickly are consumer durable loans approved?
Approval is one of the biggest benefits of a Consumer Durable Loan, as it is often instant. If you meet the criteria and have the documents ready, you can get approved on the spot, especially when buying from a partner retailer.