With the festive season of Christmas and new year coming up, various stores and online websites come up with exciting offers on durable consumer items like ACs, TVs, Smartphones, laptops, furniture, etc., to woo customers. However, not every individual has enough liquid cash to pay for them up-front. This is where apps like Paysense, Cashe, and other such Instant loan apps step in with their durable consumer loan option to help you spread the cost of your chosen product across a period.
Though it is very easy to avail of durable consumer loans from such apps, there are certain things listed below that most of us are unaware of or skip while availing the loan:
Interest Rates: Do you know the interest rate on durable consumer loans is less than the interest rate applicable on credit card balances and personal loans? Few financial institutions also offer a 0% interest rate offer on specific products. Hence, while choosing where to take the loan from, check and compare interest rates of Paysense with different institutions because this is the additional amount you will be paying. Other times, some stores and e-commerce portals have tie-ups with different financing firms to offer the best EMI option to consumers.
Time Duration: Along with the interest rate, the duration of the loan also amounts to serious thought as it reflects the number of instalments that will have to be paid by the borrower. Usually, the duration ranges between 3 months to 24 months. As mentioned above, few institutions offer interest rates at 0% interest rate on durable consumer loans. In case you are getting one, then a longer duration of the loan will not put an additional burden on the pocket, and in case you are paying interest on the loan, then a shorter time duration is an ideal choice as it will lead to a less amount being given as interest.
Figure out the way to pay for Down payment: You must know that banks provide loans for 80-95% of the total amount of product. This means it is the borrower who has to pay for the rest of the amount as the down payment. The upper & lower cap for the down payment varies across financial firms. It could be between 10-25% of the product price, and in some cases, it could be as low as 0%. When choosing a financial firm, consider your available budget first. If the interest rate is applicable, it is suggested to make a down payment of 20-25% of the total amount of the product as it will reduce the total number of EMIs and due amount.
Read through the fine lines: Do not believe any catalogue if it says that the loan has a 0% interest rate. Read through the fine lines and understand the hidden costs behind it, such as processing fees, not being able to avail of any lucrative cash discounts, foreclosure charges, etc. Ask for all these questions to Paysense or any other firm you are availing loan from related to hidden charges beforehand.
Now that you have availed a durable consumer loan to purchase the item you have been eying on for a while, it is time to plan how you are going to pay for it in a stipulated time to ensure your CIBIL score doesn’t get affected. When you pay off your Cashe or the bank you have availed loan from within the stipulated tenure, it helps to increase your CIBIL score and increases your eligibility the next time you need a loan.
Analyze your income and obligations firstly: Before you set off to pay your durable consumer loan or any loan from Paysense, it is important to analyze your current income and obligations. Determine your monthly expenses in addition to other obligations. Under no circumstances should your budget rely entirely on credit cards. Knowing your current obligations and expenses will help you decide where you need to cut down to be able to pay off the loan amount during the tenor.
Save for extra payment: Supposedly, your monthly EMI to Paysense comes down to INR 5,000; it is suggested to save for INR 10,000. By saving for an extra month, not only you can pay off loans much faster, but you also make up for that month where you couldn’t be able to pay for the EMI due to some emergency.
Use your variable pay to pay off the loan: If you are getting any incentives and bonuses, you can use that amount to pay off a large amount of your Cashe loan that will help you reduce your loan liability considerably.
If required, make a few lifestyle changes: You need to realize that sometimes the burden of a loan can’t be paid off with the extra amount you are left with at the end of the month. Other times, it is required from the borrower side to make a few lifestyle changes. Figure out what are those expenses which you could avoid. It could be cinema tickets, dining out, splurging at the time of sale and, using the saved money to repay your Cashe loan amount.
Involve your family members: This step should only be considered when there is no other option left to pay your monthly EMI. If your spouse or other members in your family are working and have a regular income, you can ask them to involve their earnings to repay the loan earlier. This ensures you don’t miss out on a single EMI of Cashe or another financial firm that also saves your CIBIL score from taking a dip.
Consumer durable loan allows you to make that purchase you have been withholding for a while due to short in funds on easy instalment/prepayment option. Indeed getting a durable consumer loan is beneficial due to the fact it is easily available at a low-interest rate and requires a very less number of documents. There are just a few things borrowers must keep in mind when applying for a loan, such as processing fees, repayment fees, etc.