Planning to buy consumer durables? Check out your office loans before approaching any bank or finance company. Although nationalised banks are offering loans for consumer durables at reasonably low rates, office loans are the cheapest, any day. But if you're not amongst the lucky few to have your office to finance your loans, there are still some good options.

Till a few years ago, foreign banks were in competition with both non-banking finance companies and nationalised banks in this sector. But not anymore. Citibank and ANZ Grindlays, which were quite active in financing consumer durables, have stopped the schemes altogether. As a result, you are left with a limited choice in bank loans. Among the nationalised banks operating this scheme, the State Bank of India (SBI), the Syndicate Bank and the Canara Bank are quite prominent. Of course, companies such as Countrywide (a joint venture of the Housing Development Finance Corporation and GE Capital) and BPL Sanyo Finance, have been quite aggressive in capturing the market of consumer-durable finance.

For the second best option after office loans, let's look at the rates of interest offered by each of these players. The State Bank of India, which is one of the first in the bank finance business with more than 10 years into consumer durable loans, is offering this facility at 17.75 per cent on a reducing balance basis, according to D D Mathur, assistant general manager, SBI. Mathur claims that it's the lowest rate in the market at present.

The Syndicate Bank, on the other hand, is offering consumer-durable loans at 19.5 per cent on the reducing balance, and Canara Bank at 18.75 per cent at the same conditions. Processing charges vary from 0.5 per cent to 1 per cent at these banks, which seems quite nominal.

As opposed to banks, Countrywide's interest rate is around 18 per cent, which is calculated flat and not on a reducing balance. So a loan from the nationalised banks works out to be much cheaper than one from the likes of Countrywide. Then why should people go to companies such as Countrywide? The answer to this question is quite obvious—the Countrywide facility is available right at the dealer counter from where you're purchasing any of the consumer durables - refrigerator, TV, air-conditioner, cooler, personal computer, music system, washing machine or anything else, under the scheme. You save on legwork and time, and also escape a lot of banking hassles.

But then again, you end up paying substantially more in your installments. If you submit the required pay-slip (in case of salaried people), or certified balance sheets and I-T returns (in case of self-employed people), along with a proof of residence and bank details to the dealer with whom Countrywide has a tie-up, the loan is sanctioned within three days.

If you don't mind taking a little bit of trouble, nationalised banks are alternatives worth considering. Says S C Jain, assistant general manager (credit), Syndicate Bank, ``This scheme is high yielding with the least overdues and helps the bank enlarge its client base. For the clients, too, it works fine with low interest rates and easy eligibility conditions.''

``SBI sanctions a maximum loan of 12 times the salary to an individual or 75 per cent of the invoice value of the product, whichever is less'', says Mathur. If the salary of an individual is falling short, it can be clubbed with that of his or her spouse to meet the salary requirements. Canara Bank sanctions a little less at 10 times the salary of an individual or 75 per cent of the invoice. And Syndicate Bank loan is pegged at three times the salary of an individual or Rs 25,000, whichever is lower, says Jain. On the flip side, Countrywide finances up to 85 per cent of the price as compared to the bank loan limits of 75 per cent of the cost of the product.

The SBI repayment period ranges from 36 to 60 months and Canara Bank from six months to three years. Syndicate Bank has fixed its repayment period at 30 months. Countrywide offers eight tenure options from six to 36 months.As far as network and service is concerned, Countrywide is the easiest to access with its tie-up with dealers. But Mathur stresses that a SBI loan is easy, too.

SBI has given powers to its branch managers to sanction loans, thereby making it an easy-to-access facility. With 815 SBI branches in the Delhi circle and another 600 in metros and urban centres, it takes about three days to get this loan sanctioned, says Mathur. Putting the number of running consumer durable loan accounts in SBI at 20,000, Mathur claims that these loans are on the rise. Canara Bank officials, however, present a different picture altogether. Despite its wide network, Canara Bank hasn't really been able to market this product very well. This is mainly because office loans are so much cheaper, they say. In the case of Syndicate Bank, although 125 branches in the Delhi circle are operating this loan scheme, the bank is quiet on the success rate.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.