A Complete Guide to Consumer Durable Loans

As we begin a new decade into our lives, a lot of us might be considering an upgrade on the items we use and rely on a regular basis. Starting from the TV in our living room all the way to the geyser in our washrooms, most of the items in our households could use an upgrade, but sadly that is a financial commitment a lot of us can’t afford.

However, thanks to the changing lending landscape in India, more lenders are now willing to give out consumer durable loans, so that borrowers can easily finance their needs and take a step towards the upgrades they desire. 

Thus in today’s article, we will share with you everything you need to know about consumer durable loans in India.

What Is a Consumer Durable Loan?

One of the first and most important aspects we need to be aware of is the meaning of a consumer durable loan. In simple terms, a consumer durable loan can be understood as a financing instrument wherein the lender lets you borrow a certain amount of money in order to enable and empower you to buy the items you need, which can include everything from a new sofa set all the way to the latest fridge you have been eying.

As the name suggests, consumer durable loans are meant for the end customer and thus are generally facilitated either through the eCommerce website the consumer is shopping from or the local dealer, the consumer, is reaching out to. Along with this, it also needs to be noted that the word durable implies that such a loan will cover all household items, which would depreciate in value and need replacement in the future.

How Much Loan Amount Can You Avail?

Now that you understand the meaning of a consumer durable loan, the question that must be pondering your mind is how much amount can you avail through this loan? 

As with most other loans in India, the exact amount you can avail of tends to vary from one financing institution to another, but generally, it has been observed that you can get a loan of up to ₹15 lakhs if the minimum total price of the item you are purchasing is ₹40,000. 

Most banks and NBFCs tie-up with either local dealers or online eCommerce retailers to extend this offering to customers and thus the total amount you can avail may also depend on whether you stay in a rural area or an urban one. However, most lenders these days either offer full financing on the product or up to 90% of the cost for a large value item, with you needing to cover the rest as a down payment.

How Much Is the Interest Rate on Consumer Durable Loans?

As with most other loans in India, the rate of interest on consumer durable loans tends to vary between lenders, however since these are typically low to midrange value items, the rate of interest is more often than not very competitive and affordable for the end customer. 

Along with this, since the idea behind this loan is to simplify the process of financing an item, most lenders have significantly longer tenures on these loans, with some offering up to 36 months from the date of purchase.

How to Apply for a Consumer Durable Loan and List of Documents Needed

Now that you are aware of the most important details of a consumer durable loan, let us understand how you can apply for one and also the list of documents, you will be required to present.

How to Apply?

As mentioned in an earlier paragraph, there are 2 main ways of getting a consumer durable loan. They are as mentioned below:

  • Apply With an eCommerce Website
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These days most eCommerce websites have partnered with leading lenders to extend the consumer durable loan facility to their customers. These can either be available in the form of standalone products or even through your credit card or debit card, wherein you first make the purchase and then ask your bank to convert it into a loan. 

Either way, one of the best aspects of availing a consumer durable loan from an eCommerce portal is the fact that you can purchase the items you want as well as finance them right from the comfort of your home. 

  • Apply With Your Local Dealership
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Although the eCommerce experience is quickly catching up in India, there are many among us who prefer to shop from a brick and mortar establishment, and thus leading lenders have partnered with these dealers as well. All you need to do is, when purchasing an item from the dealer, enquire if a financing option is available or not. If the answer is yes, proceed to enquire about the various options of availing it and then proceed with your purchase decision accordingly.

List of Documents Required

No matter if you apply through an eCommerce website or a local dealership, there are certain documents you will need to present in order to get approved for the loan

Salaried Professional

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If you are a salaried employee, here is the list of documents you will need to carry:

  • Your eKYC information includes your PAN Card, Aadhar Card, or Voter ID. 
  • Your personal information as in your full name, date of birth, email address, phone number, and residential address along with supporting documents for the same. 
  • Your income information in the form of your salary slip from your employer, your latest bank statements, one canceled cheque, and your ITR documents. 

Self-Employed Professionals

If you are a self-employed professional, you will need to carry the following documents with you:

  • Your eKYC information includes your PAN Card, Aadhar Card, or Voter ID. 
  • Your personal information as in your full name, date of birth, email address, phone number, and residential address along with supporting documents for the same. 
  • Your income information in the form of your income certificate generated by your CA, your last 6 to 8 months of bank statements, your last 3-year ITR return, and a canceled cheque. 

Benefits of Consumer Durable Loans

Consumer durable loans in India arrive with a variety of benefits such as:

  • You can easily finance and purchase the items you need. 
  • You can reduce your financial stress and burden by not having to pay the whole money upfront. 
  • If you are diligent and responsible in your repayment habits, you can increase your credit score as well. 

Ending Lines

With an increase in the number of lenders rendering this service, getting a consumer durable loan is getting easier by the day. Now that you are aware of the finer aspects of this offering, all that remains is for you to go ahead, choose a lender and finance the item your heart desires.

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