Consumer products like washing machines and big LED screens are continuously in demand. Who wouldn't want to relax with their favorite program or washing machine after a long day? For many people, however, purchasing large lump sums can be challenging. This is where consumer loans that are sustainable come in. They match your salary and pay you for your equipment over time, so you don't have to pay for everything at once.
This blog aims to explain the consumer durable loan meaning, examine its features and advantages, and demonstrate how to determine it step by step.
What is a Consumer Durable Loan?
consumer durable loan is a special kind of personal loan intended for appliances and electronics in particular. This covers a range of demands, from essential items like washing machines and modular kitchens to more contemporary items like cellphones, TVs, computers, cameras, and home theater systems. Loans which typically range from Rs. 10,000 to Rs 15 lacs, have variable payback terms of a few days to 36 months and frequently have no EMI or interest rates.
What are the Features and Advantages of Consumer Durable Loan?
Now that you understand what consumer loans are, so let's discuss its advantages and features:
A long-term loan gives you the freedom to pay back the loan balance over a comfortable period. This makes it easier for you to handle the payback.
Your varied needs are met by this loan, which has a minimum of Rs. 10,000 and a maximum of Rs. 1.5 million. This allows you to purchase high-quality and essential items without worrying about breaking the bank.
This loan has zero percent interest offered by numerous lending businesses. But keep in mind that interest rates can change based on the lender and the particular goods you decide to purchase.
While repaying your loan, take advantage of the free EMI policy. This will make the refund process more affordable because you won't have to worry about additional interest charges.
The purpose of a consumer is to simplify and eliminate issues with the documentation procedure for long-term loans. Furthermore, customer support agents are available to assist you at every stage, ensuring a seamless and straightforward experience.
What are the Types of Consumer Durable Loans?
The following list of consumer durable loan kinds will help you locate the financing solution that best suits your needs.
1. Mortgage Loan: A mortgage loan is used to buy a home, where the property itself acts as security for the loan. You repay it in monthly installments over a long period. If payments are not made, the lender can take ownership of the property.
2. Student Loan: A student loan helps cover education costs like tuition and living expenses. It is designed for students and usually has lower interest rates. Repayment often starts after graduation, making it easier to manage.
3. Auto Loan: An auto loan is used to buy a car, where the car itself serves as collateral. You pay it back in fixed monthly installments. If you miss payments, the lender can take back the car.
4. Installment loan: An installment loan is a type of loan that you repay over time through fixed, regular payments. These payments are made weekly, monthly, or quarterly, depending on the loan terms. Both fixed and variable interest rates are available, depending on the lender and market conditions. One of the biggest advantages of an installment loan is that it usually doesn’t require collateral, making it accessible to a wide range of people.
5. A credit card: Credit cards are another popular and extensively utilized type of consumer durable loan. Customers can make purchases with these cards without worrying about money right away because they have pre-approved spending restrictions. Credit cards are a popular option for customers who want to extend the cost of their purchases since they allow them to pay off the amount spent over time.
How to Calculate EMI for Consumer Durable Loan?
Finding your EMI is crucial before proceeding with a long-term loan. This allows you to budget without worrying about payback. The following formula can be used to determine your EMI:
Here:P is the principal amount,
R is the rate of interest, and
N is the loan tenure.
What are the Factors Affecting Consumer Loan Interest Rates?
To determine the interest rate for consumer loans, let's examine the most significant criteria.Credit Score Matters: Your credit score is a three-digit number that shows your credit history. A high score makes it easier to get loans with better terms and lower interest rates, as it proves you can repay on time.
Big Loans, Higher Interest: If you take a large loan, lenders may charge higher interest rates since bigger loans mean higher risk and bigger monthly payments.
Loan Term Affects Interest: Longer loan terms often come with higher interest rates, while shorter repayment periods can be more cost-effective. Lenders adjust rates based on the risk of a long-term loan.
Existing Debt Impact: If you already have multiple loans, lenders may see you as a higher risk and charge a higher interest rate on new loans.
