Planning to buy the latest phone or a new music system for your room? Are you thinking to make that big purchase now or you want to wait for the sale or festive season to grab a great deal? Buying a product during the sale or festive season can help you in getting the best deal and offers available on the products. There are many companies which offer great discounts, cashback, gifts, and exchange offers during the festive seasons to encourage customers to buy more goods and increase the sale. These are all marketing gimmicks and linked with well-planned strategies to sell more units. Besides, all those technicalities, as a consumer the main concern is to get the best deal on a product which you are planning to buy. While making these big purchases the big question is that are you going make full payment in one go with cash? Are you going to use your credit card? Will you borrow a consumer loan from PSU? While choosing any of the available option you should always keep your budget and finacial liabilities in mind. Always choose for a way which is more convenient and at the same time will help you to manage your finance in a better way. Nowadays making payments with credit card is not really a good option as most of the banks don't offer 0% interest EMI schemes on purchased amount. Let's compare all three available options to purchase consumer durable.
Making payment with credit card
According to the recent changes most of the banks charge you interest on an EMI schemes. Different banks charge different rate of interest for same tenure and amount. The interest rate may range between 12% to 15% for 9 to 12 months EMI. However making payments through your credit card is hassle free as you are not supposed to give any kind of address proof, ID proof or salary proof to get the loan sanctioned. But there is one clause some retailers accept specific credit cards with whom they have tie-ups to ge the payments. Therefore, you should ask this in advance from the retailer regarding the acceptance of your credit card.
With credit card you have the option to swipe the credit card to make the full payment in one go and later convert that into small monthly EMI. Converting your credit card dues to EMI would reduce your monthly financial burden, but in this situation as well you will pay at least 12% of interest on your monthly EMIs. If you are paying EMIs on time, then there is no worries, but if you default in paying EMIs, then your interest rates increases accordingly for remaining EMIs.
Borrowing Loan from Bank
There are many banks which offer loan for buying consumer durable such as State Bank of India, Punjab National Bank and IDBI bank. These banks offer consumer durable loan at a lower price as compared to other financial firms. These banks charge interest rate between 12% to 13% for offering consumer durable loan. Although taking the loan from the bank could be cumbersome thing. It is a time-consuming process and you have to go through a proper process to acquire the loan. Most of the banks ask for a few documents before providing you loan to check your eligibility and authentication.
- Income proof
- Bank statement of last six months
- Address Proof
- Identity Proof
- Age Proof
Almost every bank after checking your eligibility ask you to put some margin money for the loan and at times ask for guarantor as well to disburse the loan.
Financing from non-banking financial firms
You can finance your consumer durable from any of the non-banking finance companies. These companies provide you funds to buy consumer durable. Companies such as Bajaj Finserv, Shriram City Unioin Finance, Tata Capital and GE Money offer you consumer durable loan at 0% interest EMI to buy home appliances. To avail that loan you are required to submit some documents such as identity proof, income proof, salary slip of last three months, bank state month of last three months and your recent photograph. These financial firms ask you to make down payment of first four installments and also charge processing fee on the loan. This is one of the most consumer friendly and cheapest way to opt for a loan. This is really a wallet friendly option to borrow a loan for buying a consumer durable.
|Titles||Scenario 1 (Credit Card)||Scenario 2 (Bank)||Scenario 3 (Finance Firm)|
|Loan Amount||Rs. 30,000||Rs. 30,000||Rs. 30,000|
|Interest Paid||15% for 10 Months||12% for 10 Months||2% for 10 Months|
|Processing Fee||As per amount||As per amount||Flat 250|
|Total||Rs. 4500+ Processing Fee||Rs. 3600+ Processing Fee||Rs. 600 + 250|
(Updated on:10 November,2016)