Plan Your Expenses This Festive Season
Ever since the advent of the festive season, banks have been offering concessions in the retail loan interest rates. A few banks have launched special schemes, while some others have their loans at base rates. There are also a few banks who introduce new schemes during the season.
Banks, during festive seasons, offer specialized consumer durable loans at low processing fees during the festive season, on existing unsecured personal loans. There are also several non-banking financial companies (NBFCs) that tie up with e-commerce websites and retail or to offer discounts or zero interest loans.
Different banks charge different rates for consumer durable loans. State Bank of India (SBI) is charges 15.5%, without margin, for its festival loan with an upper limit of Rs. 50,000. On the other hand, the consumer durable loans at Andhra Bank are charged at 15.75% -16%, with a margin of 15% price of the product.
Another option is using credit cards to avail a loan and convert it into EMI. In case you avail a personal loan or consumer durable loan, the tenure to repay is longer, making it easy and convenient. Loans are usually preferred over credit cards since the repayment tenure is longer, like in the case of personal loans, the amount can be repaid till 5 years. On the other hand, credit card EMI repayment has to be completed between six and 12 months.
Taking EMIs on personal loans are similar to taking a personal loan instantly, without documentation or delay. There are some credit cards that come with zero percent interest on EMIs. There are other benefits of shopping with a credit card such as additional discounts offered by retail chains or e-commerce websites in tie up with certain bank, and reward points. However, a disadvantage of credit cards is that their limit will be reduced till the repayment.
One disadvantage of the EMI on card is the limit on your card will be reduced to that extent till you finish repaying. So if there is a significant amount outstanding and the card is actively used, it is advisable to opt for a loan. In case of a default on one instalment, penalty will be applied for the other EMIs too, if any. Sometimes, the penalty can be charged as high as 40%.
When it comes to personal loans, you may have to pay some margin upfront, which is not applicable for credit cards. The amount can be 5-10% or sometimes more than the rate of the product. There are several NBFCs that offer zero interest personal or consumer durable loans. In
In such a case you must check whether the discounts offered on upfront margins are the same or not. In case the discount is higher, then it means that the NBFC is paying the amount on your behalf. At such times, it is advisable to use a credit card and convert the loan into an EMI.
So whether you avail a loan or opt for credit cards to pay your bills this festive season, check the retail store for payment options and other details.