It is not entirely uncommon to find yourself in a situation where you want to buy an appliance or gadget but find it to be beyond your current means. It is also equally likely that you were offered some kind of ‘Buy in EMIs’ option, either by the salesperson or an eye-catching ad placed appropriately when browsing an online store. This facility that gives you the option to buy something you cannot immediately afford with funds from a lender is a consumer loan. A consumer loan can be defined as the amount of money which is lent to an individual (usually on a non-secured basis) for personal, family, or household purposes and not for any business-related requirement.
In a way, a consumer loan is a more restricted form of a personal loan. This might make you wonder if you should opt for a consumer loan at all when you can get more freedom with a personal loan. The answer comes in the form of offers and deals that accompany most consumer loans. Consumer loans for a large number of household items, especially electronic gadgets, are available at 0% finance subject to terms and conditions. This alone makes consumer loans a far superior choice over personal loans. There may be some minimal processing fee, but it is offset by the fact that you do not have to pay any interest. However, not all consumer loans are interest-free. Most will have interest rates and tenures comparable to personal loans. But since the funds are usually disbursed directly to the merchant, it does not encourage over-borrowing or misuse of funds.
A consumer loan, as the name suggests, is only given for the durables that are considered to be household items. When looking for a consumer loan, remember that what feels like ‘free’ money is just a loan. You have to repay the loan with interest, plus any fees and interest that may be attached as per the terms. Opt for a consumer loan only if you are confident that you can manage to pay the EMIs comfortably.