A consumer durable loan is a loan that is used to purchase commodities such as laptops, smartphones, and household appliances. These loans are very easy to get and are a good way to make a larger purchase without having to strap yourself for cash.
These loans are also the fastest way to borrow and consumers are very happy with the easy application process and the fast processing.
What the Loan Covers
These types of loans can be used for a wide range of products much like what a title loan is. Generally, you can think of it as a loan for anything from luxury items to appliances. Kitchen appliances like a refrigerator, a stove, microwave oven and freezer would be included as well as items like a water softener, a water purifier, and dishwasher. Other necessity appliances would include a clothes washer and dryer and air conditioner. If you are in the market for electronics then this loan could be used for a new television, a music system, or any type of computer or laptop. These loans are also used for smartphones, tablets and even generators or inverters. Just about any gadget, electronic or appliance would qualify for a consumer durable loan.
Who Can Get a Consumer Durable Loan
It is really pretty simple to qualify for a consumer durable loan. You need to be between the ages of 21 and 60 years old and you need to be able to prove that you have income. This proof can be in the form of paycheck stubs, an employment contract or even documents showing that you get a regular settlement payment or some other type of compensation. Also showing proof of your direct deposit from an employer will work.
How to Apply and the Process
In some cases, you can complete a loan application online. In other cases, you will need to go to the lender’s location to complete the documents requesting the loan. When you go in person you can also speed up the process by bringing the needed documents to show proof of your income. Once you have the application completed you will know very quickly if you are approved. All of this can usually happen within an hour or so. With your application approved then all you need to do is provide the down payment which is normally about 20% – 25% of the cost of the item that you are purchasing. If you have the ability to make a larger down payment then you should as this will help to reduce the amount of interest that you will be paying over the term of the loan. Also, you will need to make payments on the loan each month until it is paid off so making a larger down payment will either lower your monthly payment amount or let you pay the loan off more quickly.
The Interest
You are going to want to read all of the fine print on the loan documents very carefully before you sign them. In some cases, you will know up front what the interest rate is going to be but in other cases, it is not as clear. Sometimes there is a special promotion that states the loan to be a 0% interest rate but then you learn that there are other fees hidden in the fine print. This can be called a loan origination fee, a processing fee or some other less common name. But the fact is that lenders make money from interest or fees that they charge borrowers for the use of their money, so look very closely to see what the loan is really going to cost you. In some more rare cases, the loan really is at 0% interest and there are no upfront fees. These loans can be a promotion to draw attention to the lender or as part of a special deal with a retailer to increase sales of certain items. Another possibility is that the loan is at 0% for a short period of time but then the interest begins to apply. It is not uncommon for the interest rate to range anywhere from 15% up to 25%.
The Repayment Schedule
Your exact repayment schedule is going to be determined partially by how much you borrowed and also your income and ability to repay the loan. In general, the loans can range from as short a time period as eight months and they can extend as long as three years. Again, the item that you are purchasing and the cost of the item are a big factor in the length of your loan.
Other Tips
The definition of a durable good is that it is an item that can be used or will last for a long period of time. In other words, it is not an item that you would use up such as food, soap or fuel. A durable good can be reused many times. But it is also important to remember that at some point the item might no longer function well. An appliance has a certain life expectancy and that is based on how often you use the item and how well you maintain it. But no appliance or electronic item is going to last forever. In some cases, the items are not designed to last for a very long time. Items such as smartphones are normally used only a few years. Then consumers are ready for a newer model with more features and faster functions. So you never want to extend your finance period on a loan for an item longer than you plan to be using the item. Having a washing machine for more than three years is very likely, but you might not still be using the same smartphone in three years. So think about how long you plan to use an item before you simply take the lowest payment with the longest repayment time frame. Be smart when you select your consumer durable loan.