Consumer Durable Loan: Types, Eligibility, Interest Rate & Documentation

Consumer durable loans are provided to customers for purchase of products at recognized merchant stores, or e-commerce websites, and comes with an option to pay the amount in an equated monthly installment (EMI) for a select tenure.

Unlike personal loans where borrowers get the cash in hand, consumer durable loan is a type of retail loan that is given to borrowers to buy products by using their debit card, or the EMI amount gets debited from their savings account.

In consumer durable loans, the amount, which is the product’s price, is credited directly to the store’s bank account. However, such loans are provided only by specific lenders to eligible borrowers to help them get credit to buy products at recognized stores or e-commerce websites.

Forbes Advisor India has put together a list of lenders offering consumer durable loans, its types, eligibility, interest rate, charges, and the documentation process to help you buy products with an option to pay the amount in EMI using your debit card.

Types of Consumer Durable Loan

Consumer durable loans are provided to customers at recognized merchant stores, e-commerce websites, who have liaison with lending institutions. Such loans are offered to customers up to a certain credit limit, with or without a down payment (depending upon lender’s policy), and the EMI commences from the following month for a select tenure. 

Here are the major types of consumer durable loans provided by lending institutions.

In-Store EMI

Lending institutions have deployed representatives at various retail outlets pan-India, who facilitate customers to apply for consumer durable loans to purchase a product they desire. Such loans usually charge a down-payment, and the EMI is fixed on the remaining balance.

Here’s how a representative processes a consumer durable loan at a merchant store on behalf of the consumer.

• Step one: Customers choose the product they wish to purchase at the retail outlet.
• Step two: Lending institution’s representative checks borrowers’ eligibility.
• Step three: The documentation process is done digitally. (Consumers should be residing in the city where the store is located).
• Step four: If eligible, the customer is presented with transaction details, EMI duration, along with applicable charges.
• Step five: Upon mutual agreement, the customer takes home the product.

Debit Card EMI/ EMI Card – Point of Sale (PoS)

To facilitate debit card EMI, lending institutions have liaison with various PoS companies who have put in place PoS machines at merchant stores for consumers to purchase a product on EMI. Remember, this facility is not provided to every debit card holder. Borrowers should check with their bank, or financial institution, if they facilitate EMI options on debit cards.

Here’s how a consumer durable loan at PoS is processed:

• Step one: Consumer swipes the debit card at the store’s POS machine.
• Step two: Select the EMI option.
• Step three: Enter amount and repayment tenor.
• Step four: PoS machine checks the eligibility of a customer.
• Step five: If eligible, the customer enters a debit card PIN.

Once the loan amount is booked, the PoS receives a message confirming the transaction.

Debit Card Online EMI

A few lending institutions also provide an EMI option to its debit card holders to purchase products at select e-commerce websites. Usually the rate of interest on such loans are detailed as per tenure for consumers to make an informed decision.

Here’s how a consumer can purchase a product online at an e-commerce website using their debit card, and pay the amount via easy EMI.

• Step one: Consumer proceeds with the checkout option on e-commerce service providers like Amazon.
• Step two: Select the EMI option.
• Step three: Enter debit card details.
• Step five: If eligible, choose the repayment tenure
• Step six: Enter OTP received on registered mobile number with the bank.
• Step seven: Review and place your order

Once the order is placed, a message will pop-up confirming the transaction, along with EMI details.

Consumer Durable Loan Interest Rates in May 2023

Interest rates and charges play a crucial role that determines borrowers’ willingness to apply for a consumer loan. While some lenders do not charge interest rates on consumer loans when the EMI begins at a scheduled due date, their processing fees and other charges are considerably higher. Nonetheless, lenders who charge interest rates on consumer durable loans are fixed for the entire repayment tenure. 

Here’s the interest rate on consumer durable loans provided by top lenders.

Interest rates on consumer durable loans are accurate as of May 22, 2023.

Charges on Consumer Loans

Here is the list of charges that may be applicable on consumer durable loans.

Features of Consumer Durable Loan

Many banks in India use the term consumer durable loan interchangeably with personal loan. While personal loans are taken for fulfilling any financial needs and are credited directly to the borrower’s account, features of consumer durable loans are varied as per its type (as discussed above) and the amount is credited to the seller’s bank account.

Here’s what borrowers need to know before taking a consumer durable loan.

Applicant
Salaried, self-employed, pensioners of Indian nationals.

Age
21 to 68 years.

Cibil Score Requirement
Important. 700 to 720 and above.

Income requirement
INR 10,000 and above per month.

Loan Amount
Initially, lenders fix the maximum loan amount a borrower can get, which can be up to INR 40,000 to INR 50,000 over and above the credit check. The loan amount may be raised by the lender later, which is subject to the repayment history of past or ongoing EMIs.

Repayment Tenure
Three to 36 months.

Processing Fee
Applicable. The amount is subject to the lender’s policy.

Down Payment
Subject to lender’s policy as well as the type of consumer durable loan, like mentioned above, opted by the borrower.

Prepayment Fee
3% to 5% of the prepaid amount.

Collateral/Security
Not applicable (NA).

Cash-back
Most merchants provide cash back to borrowers on consumer loans, proceeds of which a consumer receives after purchasing a certain product on EMI basis.

How to Check the Eligibility for Consumer Durable Loan

Foremost, consumers should be residing in the city where the store is located to be eligible for consumer durable loans. The eligibility for consumer durable loans can be checked instantly, depending on how the purchase is being made — at in-store, PoS, or e-commerce websites. For purchase at PoS, consumers can swipe their debit card to know their eligibility; and for purchase at e-commerce, debit card details can be entered to know the eligibility.

However, at in-store, the sales representative will ask for a few details to check the eligibility for such a loan, and the loan amount is capped or granted as per the borrower’s credit score and repayment history of past loans.

However, one can also check their eligibility from their respective banking service provider via SMS, Whatsapp, phone call as well as mobile banking.

Documents Required to Apply for Consumer Durable Loan

Documentation is not required for customers who are already an EMI debit card holder of their respective bank. However, the process is minimal if one is applying for consumer durable loans at in-store. Remember, lenders require consumers to be residing in the city where the store is located to be eligible for consumer durable loans. 

A sales representative at the retail outlet of the respective lending institution will ask for documents, as follows:

Mobile number, email address
Proof of current residence
Voter’s ID card
PAN Card
Aadhar card
Last three month’s salary slip
Last six month’s bank statement
Bank account number

The representative clicks your photo at the store for proof of visit.

Helpful Resources

What Is Personal Loan: How It Works And When To Apply
Personal Loan Interest Rates in 2023
Banks That Provide Best Marriage Loan In India
Best Personal Loan For Self-Employed In 2023

Frequently Asked Questions (FAQs)