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Canara Bank

Personal loan is an unsecured loan which does not require collateral of any form. These loans are high risk loans for the bank and hence, to compensate the assumption of high risk, the bank charges a high interest rate on these loans. These loans are extended to the applicant based on the individuals ability to repay, this is assessed by the applicant’s credibility. There is a credit score which can be generated for every individual, this is the indicator of applicant’s credibility. A credit score of 750 is generally considered decent enough for personal loan to be extended. Typically, the tenure for personal loans are lower compared to other types of loan. This is due to the fact that these loans are higher risk. These loans are also called as signature loans or multi-purpose loan. If the borrower needs the money for multiple needs, then it is wise to avail personal loan.

How does personal loan work?

Personal loan is extended in lumpsum to the borrower. The borrower has to repay the borrowed loan in equated monthly installments (EMI) over the tenure of the loan. The tenure and interest rates are pre-determined at the time of loan sanction. The EMI constitutes both principal and interest. The interest rate is dependent on the credit score of the borrower, the higher the credit score, the lower will be interest rate.

Canara Bank personal loans

Canara Bank issues personal loans which are called consumer loans. These loans are extended to individuals for purchase of brand new durable utility articles, home appliances including furniture, computers / Laptops, electronic gadgets especially to the staff of corporate bodies and others.

The repayment options available for consumer loans is standard in the case of Canara Bank. The tenure of loans is 36 months, the repayment schedule resumes from the month following the month in which loan is disbursed. There is no prepayment penalty charged.

The consumer loan is extended either by hypothecation of the articles purchased out of the Bank loan or suitable personal guarantee / co-obligation. However, the next higher authority may waive such personal guarantee / co-obligation depending upon merits of each case.

Eligibility for Canara Bank personal loans

  • All individuals (including professionals, businessmen and salaried class)
  • Salaried individuals with minimum monthly net salary of 40 % of their gross salary or Rs. 6,000/- after meeting the installment for the proposed loan, whichever is higher.
  • Professionals and other non-salaried persons should have a minimum annual net income of Rs. 1,50,000/- evidenced by Income Tax Assessment Order (ITAO) / Income Tax Return (ITR).
  • In the case of salaried class, salary should be credited to the operating account of the applicant at our branch. Alternatively, a mandate to be lodged with employer to facilitate easy recovery of instalments.
  • Apart from income of applicant, income of spouse is reckoned for satisfying eligibility criteria in II and III above.

Quantum of Loan

The quantum of loan extended for various categories of applicants is as given below –

Salaried Persons75% of the invoice value or 15 months of net salary or Rs.1,00,000/-, whichever is less.
Professionals and other non-salaried individuals75% of the invoice value or to the extent of 50% of their annual net income in the immediate previous year or Rs.1,00,000/- whichever is less.

Rate of interest and processing charges applicable on personal loans by Canara Bank

Interest rate on personal loan or consumer loan by Canara Bank –

Scheme NameRate Of InterestPresent Interest Rates
Canara Consumer LoanOne Year MCLR + 4.45%13.15%

Processing charges on consumer loan –

  • 1 % of the loan amount with a minimum of Rs. 250/- Other features:
  • During the pendency of first loan, second loan also considered subject, within the overall eligibility, subject to there being no overdues in earlier loan.
  • Insurance is waived

Factors that affect the interest rate of personal loan offered by Canara Bank

The below mentioned factors have an implication on the interest rate of the personal loan offered by Canara Bank

  • Credit score – The credibility of the applicant is assessed by the credit score of the individual. The higher the credit score, the better are the chances for favorable interest rates. Typically, many banks prefer a minimum of 600 score for extending personal loan. A score of 750 is considered ideal and is likely to enable negotiation of favorable terms.
  • Income level – The income level of an individual is likely to impact the quantum of loan and the interest rate. A higher income level will enable the individual to borrow higher loan amount and negotiate favorable interest rate.
  • Stability of income – An elongated employment history is ideal for personal loan and favorable interest rate on the loan. The individual will be able to negotiate a lower interest rate and longer tenure on the personal loan.
  • Loan amount and duration – A higher loan amount and longer duration provides the bank with clarity of revenue for longer tenure, thus enabling the applicant to negotiate favorable terms.
  • Market interest rate – While most of the above points are still in the control of the individual, there are macro-economic factors which also determine the interest level on the personal loan. The market interest rate determines the base rate upon which the personal interest rate is determined. The interest rate on personal loan is arrived as base rate + margin. The base rate is dependent on the market interest rate trend.
  • Money supply in the economy – The market sentiment and money supply in the economy also influence the interest rate on personal loan. If the money supply is more, then the situation is favorable for the borrower, thus the interest rate are likely to be favorable for the borrower. If the money supply is less, then the situation is favorable for the lender and the lender will charge a higher interest rate.

Calculation of EMI on Canara Bank consumer loan

The official website of Canara Bank has an EMI calculator, the same can be used to calculate the EMI outflow. The calculation is instant and accurate. There may be errors while calculating the same manually, also the process is tedious. The EMI calculation will calculate the total payable amount and will clearly indicate the principle and interest separately. The value of EMI is only indicative and can vary based on the interest rate that the applicant is offered by the bank. The interest rate, as stated earlier depends on the credit score of the applicant.

Frequently asked questions on Canara Bank personal loan

1. Who can apply for Canara Bank personal loan?

All individuals, including professionals, businessmen and salaried class

2. For what purpose should the loan be used?

It is a multipurpose loan, which can be used for any financial requirement including home improvement, buying durable utility, medical expenses, vacation etc.,

3. What are the income criteria for availing personal loan from Canara Bank?

For salaried class -

Net take home salary of 40% of gross salary after meeting proposed loan instalment or Rs.6000, whichever is higher.

Note: Salary to be credited to operative account of applicant. Alternatively, a mandate to be lodged with employer to facilitate easy recovery of instalments.

For non-salaried class -

Professionals and other non-salaried persons should have a minimum annual net income of Rs.1,50,000/- (after tax) as evidenced by Income Tax Assessment Order (ITAO) / Income Tax Return.

4. What are key documents that are required for availing personal loan from Canara Bank?

The below documents are required for availing personal loan from Canara Bank -

  • Prescribed Loan Application with 2 copies of passport size photographs of borrower / co-applicant / guarantor
  • Latest Salary Certificate and Form No.16 / ITR/ITAO for last 3 years.
  • Proforma Invoice of the article proposed to be purchased
  • Suitable co-applicant / guarantor acceptable to the Bank to be offered

5. Can a second loan can be availed during the pendency of the first loan?

Yes, it can be availed within the overall eligibility, provided repayments are regular in the first loan.

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