Canara Bank Personal Loan Eligibility

The bank offers various types of Personal Loans, depending on the nature of employment. The eligibility criteria for the various loans are different and are as given below:

The features of the different types of Personal Loans under the Canara Bank Personal Scheme are as given below:

Canara Budget

• Purpose: The loan can be utilised for any purpose like paying off other existing debts, for planning a wedding, for  planning a holiday, for the higher education of your children,etc.
• Quantum: The quantum of loan will be 6 times the gross salary with a maximum of Rs 3 Lakhs.
• If the repayment capacity of the applicant is good and the profile is satisfactory a higher amount also may be considered.
• Interest: The interest ranges from 12.40% to 14.45%, depending on the risk rating. For Canara Budget Special Package Scheme with salary tie-up the rate of interest will be 12.45% p.a. and 13.45% p.a. in the absence of salary tie-up.
• Security: An employee of the same organisation with a salary account at the bank should provide co-obligation.
• Repayment: The maximum repayment period permitted is 60 months.
  Processing Fees: 0.50% of the loan amount, with a minimum of Rs 1,000 and a maximum of Rs 5,000

Teachers Loan

• Purpose: The loan is a multi-purpose loan and can be utilised for any genuine credit requirement except for the speculative purpose.
• Quantum: The loan amount will be 10 times the gross salary with a maximum of Rs 3 Lakhs.
• Interest: The rate of interest is fixed on a case to case basis as per the internal risk rating and ranges from 12.05% to 14.10%
• Security: The co-obligation of a person acceptable to the bank.
• Repayment: The maximum repayment period permitted is 48 months.
• Processing Fees: 1% of the loan amount, with a minimum of Rs 50.

Canara Pension-General Public

• Purpose: The loan is mainly for the medical expenses of the pensioner but can also be used for any genuine credit requirement.
• Quantum: The loan quantum will be up to 15 months pension with a maximum of 5 Lakhs provided the net monthly pension is not less than 40% of the gross pension after providing for the proposed EMI.
• Interest: The interest applicable will be 11.35% p.a.Wherever there is a provision for family pension, co-obligation of the spouse should be provided. Else, co-obligation of a creditworthy person should be provided.
• Security: Where the loan is availed by the family pensioner, co-obligation or third-party guarantee of a person good for the amount should be provided.
• Repayment: Repayment period up to 72 months will be provided if the pensioner is less than 65 years of age and up to 60 months if the pensioner is above 65 years of age.
• Processing Fee: Processing charges are waived for this loan.

Canara Consumer Loan

• Purpose: The loan will be provided for the purchase of any consumer durable article including a computer, laptop, furniture and electronic gadgets.
• Quantum: The salaried individuals will be provided with a loan to the extent of 15 months net salary or 75% of the invoice value, whichever is lesser with a maximum of 1 Lakh. For the self-employed individuals professionals and businessmen the loan amount will be up to 50% of the net annual income as per the latest ITR or 75% of the invoice value, whichever is lesser with a maximum of 1 Lakh.
• Interest: The rate of interest depends on the internal risk rating and ranges from 12.55% to 14.60% p.a.
• Security: Hypothecation of the article purchased with the bank finance and third-party guarantee acceptable to the bank.
• Repayment: The repayment period provided is 36 months.

Note: know about the Canara Bank Mini Statement Number service.

The following are the benefits of Canara Bank Personal Loan:

• The loan can be utilised for any purpose without restriction on end-use
• There are different types of loans for different purpose under the Scheme
• The rate of interest is competitive and is determined on a case to case basis depending on the internal risk rating.
• The charges associated with the loan are nominal
• Flexible repayment options and can be fixed as per your repayment capacity
• You can foreclose or part pre-pay the loan without any charges that will enable you to save on the interest cost.
• The eligibility criteria are not complex and can be complied with easily
• The turnaround time for the approval is quick as the loan process is not elaborate
• Simple and easy documentation
• No hidden charges

The Canara Bank Personal Loan Documents required are mention below:

Proof of residence:

• Driving Licence
• Utility bills
• Voter's ID Card
• Aadhar Card

Photo ID proof

• Pan Card
• Driving Licence
• Passport
• Voter's ID

Income proof for salaried Individuals

• Salary slips of the last three months or Salary Certificate with all the deductions.
• Latest Form 16 and ITR
• Bank account statement for the last 6 months
• Mandate from the salary disbursing authority for deducting the EMI from the salary

Income proof for the self-employed

• Audited Balance Sheet and Profit and Loss Account for the last 3 years
• ITR with income computation for the last 3 years
• Bank account statement for the last 6 months

There are various parameters considered to determine the eligibility of the applicant for the Personal Loan.  Some of the major factors affecting the eligibility for the Personal Loan are:

• Age: There is an age stipulation of 21 years to 60 years to be eligible for a loan. However, applicants in the productive age group will be better favoured since there will not be too many commitments, which will enable an affordable EMI. With an affordable EMI, the chances of defaulting in repayment will be less. Also, there is a scope for increase in the income level as they go high up the ladder which will improve their affordability and they may opt for higher EMI, which will enable them to clear the loan faster. On the contrary, if you are nearing the retirement age, the commitments will be on the higher side and also you will not be able to get a longer repayment period which will result in higher EMI that may not be affordable.
• Credit score: Credit score indicates how creditworthy you are. A higher credit score indicates that you are a financially trustworthy person. A good score is one that is above 750 and the credit score required to be eligible for Canara Bank Personal Loan is 750 and above.

The credit score of a person is determined by the credit history created based on the repayment history, the number of existing loans, the length of credit history, and the types of credit availed. If you have been repaying the existing loans promptly well within time, your score will be good. A combination of secured and unsecured loans is also considered good. Only availing unsecured loans indicates that you are a compulsive borrower who depends on the credit for expenses which will bring down your score.

If you have a good score you will be considered as a low-risk borrower and you will be the most welcome candidate for the Personal Loan. The risk involved in Personal Loans are higher as there will be no security for the loan and in the event of the loan going bad, the banks do not have any recourse for recovery. This is the reason the banks will look for the creditworthiness of the applicant while providing a Personal Loan.

• Income: The main factor that determines your eligibility is the income since it is the source for the repayment of the loan. If you have a higher income you will be provided with a higher loan amount and will also be the most preferred candidate for the loan.
• Tenure: The tenure you choose will decide the EMI for the loan. If you have existing commitments, which form a part of deductions from your monthly income, you should be prudent in choosing the tenure to accommodate the EMI in such a way that it will not burden your monthly budget and will also fetch you a good amount of loan.
• Debt to Income Ratio: Debt to income ratio i.e., the ratio of the total deductions from your monthly income to the gross income is stipulated by all the lenders to ensure that you have sufficient net take-home salary after meeting all the commitments. The debt to income ratio stipulated by Canara Bank for the Personal Loan is 60% i.e., the total deductions, including the proposed EMI, should be kept within 60% so that a minimum of 40% of net take-home salary is available after providing for the proposed EMI.
• Status of the employer: Being employed with a reputed organisation is a compulsory requirement to ensure that the income is stable. The reputation of your employer is very important since a good employer will be a good paymaster as well and the salary will be paid promptly to the employees which is very much necessary if the loan has to be serviced regularly.
• Relationship with the bank: If you have a long-standing relationship with the bank with a good track record it will be much easier to get an approval for the Personal Loan since your credibility is already established. Having a good relationship with the bank will also provide you with other perks like concession in the rate of interest and other charges associated with the loan and also a higher amount of loan.
• Number of dependants: The monetary obligation will be proportionate to the number of dependants. If the number of dependants is more the monthly expenses will also be more and so will bring down your eligibility to that extent.

There are certain aspects that you will have to work on if you have to improve the Personal Loan eligibility and spare yourself from the embarrassment of loan rejection.

• Credit score: The first aspect that the lender will verify during the loan process is the credit score that establishes your credibility as a borrower. Before applying for a Personal Loan, it is better to check the credit score. If the score is good, there is nothing to worry and you can straightaway apply for the loan. But if the score is lower than the benchmark level, you should examine the reasons for the low score. If there are too many loans with a less outstanding balance, it is better to close these loans before applying for the loan. Credit card dues that are brought forward by paying only the minimum amount due can bring down the credit score drastically. Ensure closure of short term loans, loans with small outstanding and credit card dues, over dues in the loan account, etc., before applying for a Personal Loan. Sometimes, the reason for low scores could be some discrepancies in the credit history. Check for such discrepancies and get them sorted before applying for a Personal Loan.
• Multiple applications: Always try to have a minimum of 6 months gap between loan applications. Do not simultaneously apply for a loan under a similar scheme with different lenders with an aim to get the approval from any one of them. Every time a lender checks the score, the inquiry will be recorded in the credit history and that will bring down the credit score. It also projects you as credit hungry and you will be considered as a high-risk borrower and the chances of getting an approval for the Personal Loan will be bleak.
• Declare other sources of income: Declare other sources of income like rental income, deposit interest, income from shares, etc., that will be considered while evaluating your Personal Loan eligibility.
• Maintain a good relationship: A good relationship with your bank with a good track record by paying existing loans promptly will work to your advantage when you apply for a Personal Loan. You can leverage this aspect to negotiate on the rate of interest, loan amount as well as charges like processing charges.
• Choose a lender with prudence: You should refrain from grabbing the first offer for a Personal Loan that comes your way without checking on terms and conditions. You should compare the offers available in the market and do an eligibility check using the EMI Calculator with various combinations of the rate of interest and tenure. You should choose the one that is most suitable for your monthly budget so that you do not feel financial stress in the future.
• Credit card usage: Maintaining the credit card usage level is very crucial as it affects the credit score. The ideal usage level that has to be maintained is 20 to 30%. Habitual using of the credit card to the maximum level projects your impulsive spending habit which may lead you in financial distress in the future.