5 Factors to Consider While Opting for a Consumer Durable Loan

5 Factors to Consider While Opting for a Consumer Durable Loan

Boston Consulting Group (BCG), in collaboration with search giant Google India recently released a report that noted that India’s overall consumer durables market is expected to touch $36 billion by 2023. That means the demand for consumer durables is going to increase as more and more retailers and banks allure consumers with their discounts and financing options. One of the popular financing options to buy consumer durables is a consumer durable loan. In this article, we’ll talk about this loan in detail.

  

What is a consumer durable loan?

      It is a finance option that is offered by banks and financial institutions to help customers buy consumer durables, such as TV, AC, refrigerator, washing machine, smartphone, laptop, kitchen appliances, furniture, etc. that come with a warranty period.

5 Factors to Consider Before Opting for a Consumer Durable Loan

1. Interest Rate:

           Interest rates differ from one financial institution to another, but it is comparatively lower than the rates applicable to credit cards and personal loans. While deciding the consumer durable loan provider, it is very important to give the interest rate a serious thought. Compare the various interest rates options from different lenders and choose the one that offers you the best interest rate along with the best loan terms. 

2. Duration:

         The duration is the time period you take to pay off your consumer durable loan in monthly installments. The consumer loan tenure is different for different lenders but usually ranges between 3 months to 24 months. Choose a loan tenure that best suits your financial capability. If your financial standing is sound, it’s always better to choose a shorter loan tenure as you’ll be paying less amount as interest. 

3. Down Payment

        Usually, a consumer durable loan can help you pay at least 80-90% of the product’s actual price. The rest of the amount, around 10-20% of the product’s price, you’ll have to pay upfront as a down payment. Therefore, it is recommended that before you decide to take a loan, figure out how much money you’ll have to pay as a down payment and arrange for the same. 

4. Hidden Costs

        Check for the hidden costs. These costs could be origination fees, processing fees, etc. Make sure you ask relevant questions about the hidden charges before signing on the dotted line. 

5. Documents

        With just a few documents, you can get a consumer durable loan. Keep the following documents handy while applying for a consumer durable loan: 

● Identity Proof (Driver’s License, Aadhaar Card, Voter ID) 

● Address Proof (Passport, Telephone bill, Electricity bill) 

● Income proof (Salary Slip or ITRs or Form 16)

       A consumer durable loan is an affordable way to purchase big-ticket items that can easily upgrade your lifestyle without putting pressure on your monthly budget and without disrupting your savings. The low interest, minimal documentation, quick approval, and disbursal process make consumer durable loans an attractive option to consider. 

Author bio:

  

               Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India's first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life's mission to help and educate people on various financial topics, so email him your questions at: shiv@moneytap.com.