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Personal loan: Easy to get for buying a product from a dealer

A personal loan is one which a person gets from a bank or a lender many a times without a security or collateral. The personal may be offered either because of personal knowledge of the person and his or her credentials. Many people get short time personal loans through connections with personnel in a bank or a lender. A personal loan can also be granted for purchase of consumer durables like a TV, computer, refrigerator etc.

It is common to find dealers advertising for consumer durable products being offered “Take now, pay later” basis. What is happening here is that the dealer is contracting with a lender who offers a personal loan to the person who buys the product and the dealer gets his money for the product. In most cases these personal loans are offered at the prime rate of interest.

It is also possible that a personal loan for a product like a computer, TV, Sofas etc., is offered without an interest for 6 months to one year. What is happening here is that the dealer instead of passing on a discount to the buyer offers this discount to the lender who is compensated for the interest rate which would have been charged to the buyer. Before approving the personal loan, the lender checks the credit rating. It is possible that for those with poor credit rating a personal loan for buying these products may be denied.