Canara Bank Personal Loan Interest Rate

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.

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

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.

Canara Bank Personal Loan Interest Rate FAQs