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Navigating Consumer Durable Loans: Meaning, Benefits, And Key Insights

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Consumer durable loans are a type of financing that has become increasingly popular in recent years. With the rising prices of consumer durable goods such as electronics, home appliances, and gym equipment, such loans have come as a relief for many consumers. In this article, we will explore what consumer durable loans are, their benefits, and key insights. We will also talk about specific examples such as a treadmill on EMI to help you understand how consumer durable loans work.



Consumer Durable Loan Meaning


A consumer durable loan is a type of loan that helps individuals finance the purchase of consumer durable goods. Examples of such goods include refrigerators, washing machines, TV sets, laptops, smartphones, and even gym equipment like treadmills. These loans are designed to help individuals who may not have the immediate funds to purchase such goods outright. By paying in installments or EMI (Equated Monthly Installment) over a period of time, the borrower can own the product and benefit from it before completing the payment.

 

One such popular consumer durable loan instrument that helps you convert your high-ticket purchases into No Cost EMIs effortlessly is the Bajaj Finserv Insta EMI Card. The Insta EMI Card comes with a pre-approved limit of Rs. 3 Lakh and offers you the flexibility to choose a repayment tenure of your convenience, ranging from 1 month to 60 months.


Benefits Of A Consumer Durable Loan

There are several benefits to taking out a consumer durable loan over other forms of financing, such as personal loans or credit cards.

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1.Flexibility in Repayment

One key benefit of a durable loan is the flexibility it offers in repayment. The option to pay in installments or EMI allows borrowers to spread the cost of the purchase over a period. The repayment period can vary from a few months to several years, depending on the loan amount, and the borrower’s repayment capabilities. This way, borrowers have the option to choose the loan tenure that works best for them.

2. Lower Interest Rates

The interest rates on consumer durable loans are generally lower than those on personal loans or credit cards. This is because these loans are secured, meaning the product being purchased acts as collateral. This allows lenders to offer better terms and interest rates to borrowers. However, the interest rates on durable loans can differ from lender to lender, so borrowers should compare rates and choose the best option.

3. Easy to Avail

Consumer durable loans are usually offered by various lenders, such as banks, non-banking financial companies (NBFCs), and consumer finance companies. These loans are easy to avail as the documentation required is minimal. Moreover, many lenders allow individuals to apply for these loans online, making the process quick and convenient.



Key Insights

When taking out a consumer durable loan, it’s essential to keep a few things in mind to ensure you’re getting the best deal.

1. Loan Amount

Before applying for a consumer durable loan, understand the total cost of the product being purchased and ensure the loan amount covers this amount. Also, keep in mind that some lenders may charge processing fees or additional charges, which should be factored into the loan amount.

2. Interest Rates

The interest rates on consumer durable loans can vary from lender to lender, so it’s important to compare rates and choose the best option. However, keep in mind that lower interest rates may come with higher processing fees or other charges. So, read the loan terms carefully to understand the total cost of the loan.

3. Loan Tenure

The loan tenure refers to the repayment period of the loan. Longer periods may lead to smaller EMIs, but will also attract more interest payments in the long run. On the other hand, shorter loan tenures may lead to higher EMIs but a lesser interest payment in the long run. So, choose the loan tenure that works best for you and make sure you can repay the loan easily during this period.

Example: Treadmill on EMI

A treadmill is a great investment for those who wish to get in shape or maintain their fitness levels. However, buying one outright can be costly. This is where a durable loan for a treadmill on EMI comes in handy.

Suppose you want to purchase a treadmill costing Rs. 30,000 but can’t afford to pay the full amount upfront. You can approach a bank or NBFC offering consumer durable loans and apply for a loan of Rs. 30,000. Suppose the lender offers an interest rate of 12% p.a. and a loan tenure of 12 months. In that case, you would need to pay an EMI of around Rs. 2,680 for 12 months, totaling up to Rs. 32,159. So, by taking out a consumer durable loan, you can own a treadmill without having to pay the full amount upfront.



Conclusion


Consumer durable loans are an excellent way to finance the purchase of expensive consumer durable goods. Such loans offer flexibility in repayment, lower interest rates, and easy availability. It’s crucial to keep in mind the loan amount, interest rates, and loan tenure when taking out such loans. Understanding these key insights can help you make a well-informed decision and get the most out of a consumer durable loan. So, whether you’re looking to buy a refrigerator, a washing machine, or a treadmill, a consumer durable loan offers an excellent way to finance your purchase.

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