Monday, July 18, 2016

What is meant by consumer loan provided by commercial banks in India?

At present, commercial banks in India are providing retail loans to the customers for various purposes.
The consumer loan is a retail loan scheme which provides for purchase of consumer durables like televisions, refrigerators, microwave ovens, furniture items etc.,

Salient features of the scheme:
  • It is a loan scheme for purchase of consumer durables
  • It is available to both salaried employees and non salaried employees
  • Loans are available upto Rs. 1.00 lakhs
  • The repayment should be made within thirysix months and the repayment is by means of equated monthly instalments - EMI
  • The articles purchased out of the loan namely; refrigerators, micro ovens etc., become the securities for the loans
  • The rate of interest is as decided by the bank
  • Normally processing charges upto one percent is collected by the bank with a minimum of Rs. 250.00

Attractive features:
  • The loans are made available from all branches of the bank
  • The longer repayment period for consumer loan ensures lower equated monthly instalments and enables the borrowers to opt for a bigger and better consumer durable articles
  • In the case of prepayment of any amount, no prepayment charges
  • There are no hidden charges
  • Some banks provide even a second loan under this scheme, even before closure of the first loan
  • At present state of the art internet banking facility is available which provides loan liability details on any given day during the tenure of the loan.
  • Many banks adopt simple documentation procedure and the loans are sanctioned quickly and disbursements are immediately made

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