Consumer Durable Loan

Consumer durable loan interest rates may vary from one lender to another. Some of the key factors that may affect the interest rate on consumer durable finance include the cost of the item the applicant is purchasing, the applicant’s credit score, employment type, tenure of repayment, etc.

Following are some of the key features of consumer durable loans:

• Loan amount: Anywhere between Rs. 3,000 to Rs. 15 Lakhs.
• Loan to Value (LTV): Usually, up to 100% financing is offered on consumer durable goods.
• Rate of interest: Most lenders charge a 0% interest rate on these loans. Most leading lenders offer a no-cost EMI on these loans.
• Tenure of repayment: Ranges from a few days to up to 60 months.
• Type of loan facility: Secured as well as unsecured.
• Foreclosure charges: Nil
• Processing: These loans involve a hassle-free documentation process with quick disbursal.

You can apply for a Consumer Loan with any of the leading banks/ NBFCs mentioned below with their key features:

HDFC Bank

• Loan amount: Rs. 10,000 to Rs. 15 Lakhs.
• Tenure: 6 months to 36 months.
• Rate of interest: 10.55% p.a. to 39.83% p.a.
• Processing fees: Rs. 749 + GST.
• Benefits: Instant approval, quick disbursal, and 100% financing.

SBI

• Loan amount: Rs. 3,000 to Rs. 2 Lakhs.
• Tenure: 3 months to 36 months, depending on the loan amount.
• Rate of interest: 9.70% p.a. to 18.20% p.a. However, most consumer durable products are available at No Cost EMI offered by brands.
• Processing fees: Nil.
• Benefits: Zero documentation, EMI facility to pre-approved customers, and No-cost EMI by most brands. 

Bajaj Finserv

• Loan amount: Credit limit up to Rs. 2 Lakhs.
• Tenure: 3 months to 24 months.
• Processing fees: Rs. 749 for smartphones and laptops, and Rs. 767 for cameras.
• Benefits: Latest electronics on EMI, pre-approved offers, and up to 100% funding at zero or low-interest rates.

IDFC First

• Loan amount: Rs. 5,000 to Rs. 5 Lakhs.
• Tenure: 3 months to 36 months.
• Rate of interest: 9.5% p.a. onwards.
• Processing fees: As applicable at the time of loan agreement execution.
• Benefits: No Cost EMI, instant approval in 2 minutes, and automated credit history check. 

Tata Capital

• Loan amount: Rs. 10,000 to Rs. 5 Lakhs.
• Tenure: 6 months to 24 months.
• Rate of interest: 0% p.a. onwards.
• Processing fees: Rs. 0 to Rs. 10,000.
• Benefits: No Cost EMI, minimal documentation, instant approval, and nil foreclosure charges.

IndusInd Bank

• Tenure: Up to 36 months.
• Rate of interest: 0% p.a. onwards.
• Foreclosure charges: Nil.
• Benefits: No Cost EMI, instant online application and approval.

Fullerton India

• Loan amount: Rs. 11,000 to Rs. 30,000.
• Tenure: Up to 60 months.
• Rate of interest: 11.99% p.a. onwards.
• Processing fees: Nil.
• Benefits: Online application, minimal documentation, and affordable EMIs.

Most lenders offer consumer durable loans to salaried as well as self-employed individuals. The eligibility criteria for these loans may vary depending on the applicant’s profile, credit history, loan amount, and lender’s policy. Following are the basic eligibility criteria required by top lenders for consumer durable loans in India:

Eligibility Criteria for Salaried:

• Age: Minimum 21 years and maximum 65 years for new customers (68 years for existing customers).
• Minimum work experience: 2 years.
• Minimum income: Rs. 15,000 per month.

Eligibility Criteria for Self-employed:

• Age: Minimum 21 years and maximum 68 years.
• Minimum income: ITR of Rs. 1.5 Lakhs.
• Business stability: At least 2 years in the current business.

Note: The eligibility criteria mentioned above are generic, and the actual eligibility norms may vary from lender to lender.

Following are the common documents required for availing of a consumer durable loan at top lenders:

• Duly filled application form
• A recent passport-sized photograph of the applicant
• Identity proof: Aadhaar Card/ Passport/ PAN Card/ Driving License/ Voter ID/ Job ID Card issued by NREGA/ National Population Register.
• Residence proof: Lease & License Agreement/ Utility Bills/ Aadhaar Card/ Ration Card/ Passport/ Job ID Card issued by NREGA/ National Population Register.
• Income proof for the salaried applicant: Salary slips of the last 3 months/ Bank statement of Salary Account for the last 6 months/ Form 16
• Income proof for the self-employed applicant: Latest bank account statement/ Last 2 years’ Income Tax Return (ITR)/ P&L Statement and Balance Sheet
• A canceled cheque/ IMPS validation
• A duly signed ECS mandate
• A non-dated cheque, issued in favour of the lender, mentioning the entire amount of loan needed.
• Any other document as required by the lending bank.

A consumer durable loan is a type of credit which can be used to buy consumer durable products, such as electronic gadgets, household appliances, etc. Instalment Loan is the most common type of consumer durable loan. It is different from an EMI conversion using a credit card/ debit card because you don’t have to use any card to complete your purchase and/or set up an instalment-based payment plan.

Instalment Loans are the most common type of consumer durable loans, which are usually repaid in weekly, fortnightly, monthly or bi-monthly instalments according to a preset timetable. These loans may come with fixed or variable interest rates. They may or may not require security/ collateral for sanction.

Following are some common types of Instalment Loans based on their key features:

• Fixed interest rate consumer durable loan: Just like personal loan interest rate mechanism, consumer durable loans are usually offered at a fixed interest rate to borrowers. These consumer loans have a fixed interest rate which does not fluctuate throughout the loan tenure.
• Variable interest rate consumer durable loan: For this type of consumer loan, the interest rate is levied on the outstanding balance, which varies according to the change in market interest rates. Due to changes in market rates (Repo Rate, MCLR, etc.), your interest payouts will also vary for these loans. However, floating interest rate consumer loans usually have limits on how high or low their interest rate can be.
• Unsecured consumer durable loan: These loans are the most common form of instalment loans wherein the borrower does not have to pledge any kind of collateral/ security to obtain the loan. The interest rates for unsecured consumer durable loans can be higher than the secured ones. However, most lenders offer these loans at competitive interest rates similar to personal loan interest rates. In fact, in some cases (like festivals and other special occasions), some lenders may even provide you with special offers with zero processing fees and/or a concessional on the standard rate of interest.
• Secured consumer durable loan: Secured consumer durable loans can be secured against the pledge of any asset as collateral. These loans in India usually involve the hypothecation of the item to be purchased. Some lenders also provide secured consumer durable loans using other instruments such as gold ornaments, RBI Bonds, fixed deposits, LIC policies, etc. As these are secured loans, the interest rates are usually lower than that for unsecured consumer durable loans. However, if you are unable to repay your loan due to any reason, the lender can claim your pledged security to cover your loss.

Apart from the interest rate, you might have to pay the following additional fees and charges on a consumer durable loan:

• Processing fees: This fee usually covers the administrative charges involved in the disbursement of a loan. The consumer durable loan processing fee may vary between 0% and 6% of the sanctioned loan amount.
• Foreclosure charges: Most lenders provide borrowers with the option to pre-close a consumer durable loan. However, if you pay off your loan in full before the end of the tenure (also known as loan foreclosure), you may have to bear the foreclosure/prepayment charges anywhere between 0% to 6% of the principal amount prepaid plus applicable taxes.
• Late payment charges: If, due to any reason, you delay your EMI payment, you have to pay a fixed late payment charge along with the due EMI amount.
• Bounce charges: Bounce charges are applicable if you miss any EMI payment because the account linked for the loan payment has either insufficient funds or has been closed. This charge is generally fixed at around Rs. 500.

Some lenders offer consumer durable loans at a zero interest rate; however, some do charge interest on these loans. These interest rates can be affected by various factors, as mentioned below:

• Loan amount: If you apply for a higher loan amount, it will generally result in getting a loan at a higher rate of interest because a higher loan amount generally leads to higher EMI, increasing the risk of default for the lender.
• Credit score: A credit score is a 3-digit number that summarises the borrower’s past and existing repayment behaviour. A credit score ranges from 300 to 900. Any score of 750 or above can get you a consumer durable loan easily at an attractive interest rate as it indicates your reliable creditworthiness. 
• Repayment tenure: Longer tenure of repayment usually comes with a higher interest rate and vice versa.
• Current debt: If you have any existing outstanding debt, the interest charged will be higher. That is because existing high debt is perceived to increase the risk of loan default for the lender.