Canara Bank: Consumer Loan for Rs.6000 Monthly Income Earner
A consumer loan is the bank product by which the customer or borrower receives a certain amount of money from a bank or entity (lender). In exchange, borrower has the obligation to return this capital in addition to previously agreed interests, in periodic payments or installments.
Consumer credit is generally granted for the purchase of goods such as: electronic or digital appliances (such as televisions, smart phones, washing machines, etc.), furniture, computers/laptops, etc. But there are some lenders who offer consumer loan for financing educational expenses or services, health care, travel, etc. as well.
Consumer or borrower can be salaried working employee, self employed, or other professionals with regular income.
Amongst the various eligibility criteria for consumer loan, income is the most important one. And depending on the income; loan is either approved or rejected. And if approved, quantum of the loan amount is calculated based on the income of the applicant.
In this article, we’ll discuss frequently asked questions about consumer loan from Canara bank.
Borrower’s ability to repay the loan is judged based on the monthly income. For salaried working professionals, minimum net monthly income required to get consumer loan is 40% of the gross salary or Rs. 6000, after paying the EMI.
Yes. Canara bank offers consumer loan to self employed businessmen and other professionals provided they meet income and other eligibility criteria.
The minimum yearly income of Rs. 1,50,000 as per Income tax return or income tax assessment order.
For salary earners, credit offered is 75% of the invoice value or 15 months of net salary or Rs.1,00,000/-, whichever is less.
For non-salaried, 75% of the invoice value or 50% of their net yearly income in the immediate previous year or Rs.1,00,000/- whichever is less.
Yes, Canara bank offers prepayment facility.
There is no prepayment penalty.
Borrower needs to repay the whole loan amount within 3 years or 36 months.
It starts the month after the loan is disbursed.
Depending on the individual case, collateral is asked which could be hypothecation of the product purchased or suitable personal guarantee / co-obligation.
It is 1% of the total loan amount excluding the interest rate or minimum Rs. 250.
(1) Firstly, the minimum net income required is very less i.e. Rs. 6000 per month.
(2) There are times when you need money to buy goods or services such as a furniture, a computer, electronic appliances for home or office but you don’t have enough money. In such scenario, consumer loan from Canara bank is beneficial.
(3) Borrower can buy several durable items at once. This is a great opportunity especially for couples who are starting to live together or people who have become independent and who want to furnish their new home.
In India, consumer loan is offered by following categories of institutions:
(2) Peer to peer lending companies
(3) Financial services companies (non-banks) including fintech companies
(4) Private money lenders
(5) Mobile wallet companies
While consumer loan makes it super easy to buy the stuffs you want, they are among the main reasons why people fall into over-indebtedness. Since interest rates are higher than the market rates, lending companies take advantage of this, if you are unable to repay. That’s why it’s essential that you always try to meet payment deadlines on time and by making full payment.
This is the reason why borrower should make his/her own budget and set as a goal to save whatever is possible and pay off debt as soon as possible, since there is no prepayment penalty.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 35+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries. He has authored many articles on this site (allonmoney.com).