Canara Bank Personal Loan Eligibility

Canara Bank offers a personal loan up to Rs. 3 Lakhs at interest rates starting from 11.25% p.a. to salaried individuals. The loan is offered to all confirmed employees of central/ state government, reputed PSUs/ Joint Stock Companies/ corporates/ public limited companies/ private institutions, lecturers/ assistant professors/ professors of colleges, research institutes & universities, and IT/ BT companies.

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:

Type of LoanEligibility
Canara Budget
  • Confirmed employment with Central/State Government Departments/PSUs and Joint Stock Companies.
  • Lecturers/Professors and Asst.Professors of Colleges/Research Institutions and Universities with confirmed service.
  • Permanent employees of IT/BT Companies
  • Salary account of the applicant should be maintained with the bank
  • The total deductions including the EMI for the proposed loan should not exceed 75% of the gross income. The net take-home salary should not be less than 25% or 10,000, whichever is higher.
Teachers Loan
  • Teaching and non-teaching staff of schools and colleges who are confirmed in service.
  • The salary account should be maintained with the bank
  • A minimum net take-home salary of 30% of the gross income after providing for the proposed EMI or 10,000, whichever is higher, is mandatory.
  • An undertaking letter from the salary disbursing authority at District/Block level stating that the salary account will not be shifted without obtaining NOC from the bank branch where the account is maintained.
Canara Pension-General Public
  • All Central Government/State Government /PSU Pensioners and Corporate pensioners can apply for the loan.
  • Family pensioners of all the above category of pensioners
  • The pension should be drawn through the account maintained with the bank.
  • A net monthly pension of 40% of the gross pension after providing for the proposed EMI is mandatory.
Canara Consumer Loan
  • All salaried individuals with a net take-home salary of 40% of the gross salary or 6,000, whichever is higher, can apply for the loan.
  • Self-employed individuals/professionals and businessmen, with a minimum net annual income of 1.50 Lakhs as per the latest IT Returns, are eligible for the loan.
  • If salaried, the salary should be routed through an operative account with the bank or an undertaking from the employer that the EMI will be deducted from the salary of the employee and credited to the loan account should be available.
  • To enhance the loan eligibility the loan can be availed along with the spouse whose salary will be considered to arrive at the loan quantum.

Features of Canara Bank Personal Loan

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.

Benefits of Canara Bank Personal Loan

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

Documents Required for Canara Bank Personal Loan

The following documents have to be submitted along with the application for the Personal Loan and two passport size photographs:

Proof of residence:

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

Factors Affecting Canara Bank Personal Loan Eligibility

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.

Tips to Improve Canara Bank Personal Loan Eligibility

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.

Kotak Personal Loan Festival Offer 

Ahead of festival season, Kotak Mahindra Bank has announced Rs 999 flat processing fee offer on Personal Loans. Customers can avail of instant approvals on personal loan applications up to Rs. 20 Lakhs at lowest interest rate starting at 10.25% p.a for maximum of 5 years. 

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Canara Bank Personal Loan Eligibility FAQs

What are the factors to be taken care of before applying for a Personal Loan?

Before applying for a Personal Loan you should do a comparison of the rates and offers available and choose the one ideal for your budget.  You should check for the eligibility criteria and choose a lender with easily manageable eligibility criteria. You should also check the credit score. If the score is good then there is nothing to worry or else you should wait till the score improves to match the levels stipulated before applying for the loan.

What are the aspects that affect the credit score?

The following are the factors that affect the credit score:

  • Payment history
  • Number of loans
  • Type of loans
  • Length of credit history

What is the net take-home salary stipulation for Canara Bank Personal Loan?

The net take-home salary for Canara Budget should be 25% of the gross income or Rs 10,000, whichever is higher. The net take-home salary for Teachers Loan should be 30% of the gross income or Rs 10,000, whichever is higher. The net pension should be 40% of the gross pension for Canara Pension. For Consumer Loan the net take-home salary of salaried individuals should be 40% of the gross income or Rs 6,000, whichever is higher.

What is the repayment period provided for Canara Bank Personal Loan?

The maximum repayment period for Canara Budget is 60 months, 48 months for Teacher's Loan, 72 months for Canara Pension of the pensioner is within 65 years of age and 60 months if the pensioner is above 65 years of age and 36 months for Canara Consumer loan.

What is the credit score required to be eligible for Canara Personal Loan?

The credit score required to be eligible for Canara Bank Personal Loan is 750 and above.

What are the processing charges collected for Canara Bank Personal Loan?

The processing charges collected are different for different purposes. The charges are collected at 0.50% of the loan amount with a minimum of Rs 1,000 and a maximum of Rs 5,000 for Canara Budget.  The processing charges are waived for Canara Pension loan. The charges are collected at 1% of the loan amount with a minimum of Rs 50 for Teachers Loan and a minimum of Rs 250 for Canara Consumer Loan.

Who can apply for Canara Bank Personal Loan?

To apply for the Canara Bank Personal Loan the following criteria has to be complied with:

  • For Canara Budget, confirmed employment with Central/State Government Departments/PSUs and Joint Stock Companies is required. Lecturers/Professors and Asst. Professors of Colleges/Research Institutions and Universities with confirmed service and permanent employees of IT/BT Companies are also eligible for the loan.
  • Confirmed teaching and non-teaching staff of schools and colleges can apply for Teachers Loan.
  • ll Central Government/State Government /PSU Pensioners and Corporate pensioners can apply for the loan can apply for Canara Pension Loan. Family pensioners are also eligible for the loan wherever there is provision for family pension.
  • All salaried and non-salaried individuals can apply for Canara Consumer Loan
  • >For Canara Budget and Teachers loan maintaining a salary account and for Canara Pension maintaining a pension account with the bank is mandatory.
  • An undertaking from the salary disbursing authority not to transfer the salary to any other bank during the pendency of the loan without NOC from the bank is required.