Before we discuss the common pitfalls that we need to avoid while purchasing a consumer durable loan, we need to first discuss what a consumer durable loan is.
A consumer durable loan can be availed if you wish to upgrade your lifestyle by buying household products that make your life better and enjoyable. You can buy products like washing machine, LED TV, refrigerator and air conditioner in order to enhance your lifestyle. The only issue is that although everyone wishes to lead a good lifestyle, not everyone can handle these expenses. This is where consumer durable loan comes into play.
But, before availing the loan, there are certain mistakes a consumer needs to avoid while finalizing the loan.
Not Researching about the Loans Offered by Different Lenders
It is important to devote some time to compare various loans offered by several financial institutions so that you can decide what suits your needs and expenses perfectly. Do not opt for a loan just because you are able to avail the same in a jiffy. Go for one that is genuinely good and you can easily avail the loan in easy instalments.
Being Indifferent About Your Credit Score
Before sanctioning loans, all the lending companies need to check the CIBIL score of the clients who have applied for a loan. CIBIL score has a huge impact on the approval or rejection of loans since a bad CIBIL score will not let you avail the loan. If you hold a CIBIL score above 750, then you are likely to get a loan and additionally you may avail the loan at a lower interest rate.
Not Checking Your Spending Limit before Availing the Loan
Do not ignore your income level before taking a loan. Although you might be offered a good loan sanction limit, before availing that, you need to check how much money you can afford to spend on a monthly basis based on the loan EMIs opted by you.
Not Being Aware of Short Term Loans
Of course, long-term loans can fetch you lower EMIs, which can be easily paid off every month, but have you really calculated how much extra you would end up paying in the long run? In order to maximize the benefits, you can always opt for a loan tenure wherein you can comfortably pay the monthly loan instalments without any issues.
Not Reading the Loan Agreement Properly
Do not be in a hurry while opting for a loan. While the interest rate for consumer durable loans ranges between 15 and 22%, you must not just focus on only the interest rates before finalizing the loan rate. You must also go through the loan agreements thoroughly before signing it blindly. If you do not understand certain terms and conditions, get your doubts sorted out by the concerned lender offering you a loan and then make an informed decision about the same.
If you are looking forward to enhancing your lifestyle, look for attractive offers rolled out by lending companies. During festivals, the lending companies offer attractive interest rates and at times interest-free loans as well for the benefit of the customers. Hence, upgrading your lifestyle with the help of consumer durable loan will become a tad bit easier than before.