You may find that there are several loan solutions on the market that can help you pay for your purchases or meet your current financial demands. Consumer Durable Loans and Small Personal Loans are two prominent options. While they both have the same goal of helping people financially, they differ in terms of traits and features. It’s essential to comprehend the distinctions between personal loans and consumer durable loans in order to make an informed borrowing choice. Find out which option is best for you by reading on.
What is a Consumer Durable (CD) Loan?
A Consumer Durable Loan is a type of loan that you can take to buy consumer durable products like appliances or gadgets. A CD loan allows you to buy appliances or gadgets now and pay for them in affordable instalments over a short time. Typically, CD loans are collateral-free, but some lenders do provide CD loans as secured loans. Therefore, it is important to learn the lender’s policies first before applying.
What is a Small Personal Loan?
A Small Personal Loan is a type of loan that does not require you to provide any collateral or security. It is designed to help you with a smaller amount of money to meet your immediate financial needs and can be used for different purposes like paying medical bills, covering education expenses, financing a wedding, consolidating debt, etc. As the name suggests, you get a smaller loan amount as compared to other types of loans, and it depends on factors like your income, creditworthiness, and the policies of the lender. Also, Small Personal Loans come with short repayment tenures and fixed or variable interest rates, depending on the lender you choose.
Consumer Durable vs Small Personal Loan
Usage: The loan amount given in a CD loan can be used for only purchasing white goods (large electrical appliances) and consumer durables. On the other hand, a Small Personal Loan can be multipurpose in nature. They are not limited to the purchase of durable goods.
Collateral: In a CD loan, collateral may or may not be required. It depends on the lender’s policies. Certain financial institutions have the option to use the purchased durable goods as security to secure the loan as well. When it comes to Small Personal Loans, they are typically unsecured.
Loan Amount: CD loans are small-ticket loans that can start from Rs.10,000 or more. On the other hand, a Small Personal Loan can range between Rs.10,000 to Rs.5 Lakh.
Repayment Tenure: The repayment period for a CD loan is shorter, ranging from a few months to a couple of years., depending on the specific lender. However, the most common repayment duration falls within the range of 2 to 3 years. When it comes to Small Personal Loans, they usually have a repayment period that ranges from three months to several years.
Benefits of Consumer Durable Loan
Now that we know the CD loan meaning, let us look at a few of its benefits
Attractive Interest Rates: Many lenders provide Consumer Durable Loans at low-interest rates. This makes it a cost-effective choice for individuals seeking to finance significant consumer durables without incurring additional interest charges.
Lower Foreclosure Charges: When it comes to Consumer Durable Loans, the charges for closing the loan before the designated period are lower compared to other loan types.
Minimal Documentation: Unlike other loan types, Consumer Durable Loans have a simplified documentation requirement. This means that you need to provide minimal paperwork when applying for the loan. As a result, the loan application process becomes quicker and more convenient for borrowers.
Benefits of Small Personal Loan
Collateral-Free Loan: One of the key advantages of Small Personal Loan is that you can obtain them without having to provide any collateral. This means that you neither have to offer any guarantees nor worry about your assets being seized if you fail to repay the loan.
Nominal Processing Fees: You will find many relatable lenders that offer minimal processing fees as low as 2% so that you do not feel a large pinch while applying for a small Personal Loan.
Flexibility in Usage: Whether it is for a wedding or to consolidate debt, a small Personal Loan can be used for anything. It can also come in handy when you need immediate cash to fund emergencies, such as rent, medical expenses, etc.
Examples of Consumer Durable & Small Personal Loan
Consumer Durable Loan
- Appliance Loan: This loan is specially made to help you pay for everyday consumer items like fridges, washing machines, air conditioners, TVs, and more.
- Furniture Loan: This loan is designed to assist consumers in financing the acquisition of furniture for their homes or offices. It covers a wide range of items, including sofas, beds, dining tables, chairs, and other similar furnishings.
- Electronic Gadgets Loan: This loan is available to individuals who wish to purchase electronic devices like smartphones, laptops, tablets, cameras, gaming consoles, and other similar gadgets.
Small Personal Loan
- Medical Emergency Loan: This loan is specifically designed to assist with medical expenses in situations of emergencies or for medical treatments that are not entirely covered by insurance.
- Wedding Loan: Individuals have the option to request a Small Personal Loan to finance various expenses related to weddings, including venue reservations, catering, decorations, photography, and other related expenditures.
- Education Loan: You can get a Small Personal Loan to help with education expenses like paying for tuition, buying books and supplies, or even funding study abroad programs.
Conclusion
Whether you choose a Consumer Durable Loan or a Small Personal Loan, it is crucial to borrow responsibly, ensuring that you can comfortably repay the loan within the agreed-upon terms. By making informed decisions and managing your finances wisely, you can leverage the benefits of these loan options to achieve your financial goals and aspirations.
Frequently Asked Questions
What is another name for a Consumer Durable Loan?
Consumer Durable Loans also go by ‘CD loans’ or ‘CD Personal Loans’.
Is a Consumer Durable Loan good?
If you need the money to purchase electronic gadgets or appliances, a consumer loan can come in handy as it offers good loan amounts, competitive interest rates, and flexible repayment tenures.
Is a Small Personal Loan Good?
A small Personal Loan is good when you need immediate financial aid. It can be useful for emergencies, such as medical bills, and rent, or to cover daily expenses.
Why should I take a Consumer Durable Loan?
You can take a Consumer Durable Loan to purchase appliances or electronics for your household. The varied benefits like low to no interest rates and lower foreclosure charges make it an attractive financing option.
What is the full form of a CD loan?
CD stands for ‘Consumer Durable.’
