Team AckoJul 20, 2023
When it comes to purchasing a car, many individuals turn to financing options to make their dreams a reality.
Canara Bank, one of India's leading banks (public sector), offers car loans with competitive interest rates to help customers acquire their desired vehicles. In this article, we will delve into Canara Bank's car loan interest rates, exploring their features, benefits, and eligibility criteria.
The following table provides more details about the Canara Bank car loan interest rates as of July 2023.
Car Loan Scheme
New Car Loan
8.85% to 11.95%
Electric Car Loan (Electric Vehicle)
8.80% to 11.95%
Following are the key features of the Canara Bank car loan schemes.
The processing fees are kept at a minimum, ensuring affordability for customers.
Customers have the option to choose monthly instalments, providing flexibility in repayment.
The loan tenure can extend up to 84 months, allowing borrowers to spread out their payments comfortably.
The bank offers financing for a significant portion of the car's value, making car ownership easily achievable for individuals.
Car loans are available for both new and pre-owned vehicles, accommodating various preferences.
Canara Bank levies a lower rate of interest on car loans, making it a cost-effective borrowing option.
Transparency is maintained as there are no hidden fees associated with the loan.
The car loan is applicable to all types of vehicles, irrespective of their model or manufacturer.
For used cars, the loan term may extend up to 60 months, offering extended repayment options.
If borrowers wish to repay their loans before the maturity date, the bank does not charge any foreclosure fees.
To calculate the Canara Bank car loan EMI (Equated Monthly Installment), you can follow these steps.
Step 1. Gather the Required Information: Before you begin, ensure you have the following details.
Loan Amount: The loan amount you intend to borrow for your car purchase.
Interest Rate: The rate at which Canara Bank is offering the car loan. It is usually expressed as an annual percentage.
Loan Tenure: The repayment period of the loan, typically measured in months.
Step 2. Apply the EMI Formula: The EMI calculation can be done using the following formula.
EMI = [P x R x (1+R)^N] / [(1+R)^N-1]
P = Loan Amount
R = Interest Rate (Monthly)
N = Loan Tenure in months
Step 3. Breakdown of the Calculation: Let's break down the calculation with an example.
Assume you want to take a car loan from Canara Bank for Rs. 5,00,000 (Loan Amount) at an annual interest rate of 8.5% for a tenure of 60 months.
Monthly Interest Rate (R) = 8.5% / 12 / 100 = 0.00708
Loan Tenure (N) = 60 months
EMI = [5,00,000 x 0.00708 x (1+0.00708)^60] / [(1+0.00708)^60-1]
Step 4. Calculate the EMI: Now, calculate the EMI using the above formula.
EMI = [5,00,000 x 0.00708 x (1.00708)^60] / [(1.00708)^60-1]
EMI = [5,00,000 x 0.00708 x 1.47212] / 0.47212
EMI = 3,540.35 (approx)
So, the Equated Monthly Installment (EMI) for a Rs. 5,00,000 car loan from Canara Bank at an interest rate of 8.5% for a tenure of 60 months will be approximately Rs. 3,540.35.
Step 5. Understanding the EMI: It is essential to note that the EMI amount remains constant throughout the loan tenure. As you repay the loan, the interest component reduces, and the principal component increases. Thus, the total outstanding amount decreases over time.
To get a Canara Bank car loan to buy a new or second-hand car, the applicant must fulfil the following eligibility criteria.
Canara Bank extends its car loan facility to self-employed individuals and professionals associated with reputable organisations.
For salaried personnel, the minimum annual gross income required is Rs. 3 lakhs. Moreover, after considering the car loan instalment, the minimum in-hand salary should be at least Rs. 12,000 or 25% of the individual's in-hand salary.
Hindu Undivided Families (HUFs) are not eligible to apply for a car loan with Canara Bank.
Other individuals, based on their Income Tax Returns, must have a minimum gross annual income of Rs. 3 lakhs. Additionally, their average monthly salary for the past three years should be at least Rs. 2.5 lakhs.
Canara Bank welcomes car loan applications from well-established businesses and organisations.
There are two methods to apply for a Canara Bank car loan. The following sections explain the same.
Visit the official website of Canara Bank.
Select “Retail Loan Products” from the “Personal Banking” menu.
Click on the “Canara Vehicle” option.
Select the “Apply Now” option.
Fill in the required details to submit the car loan application online.
Walk into your nearest Canara Bank branch and enquire about the car loan. The bank official will guide you through the application process.
Following is the list of documents you need to apply for a Canara Bank car loan.
An application form (duly filled).
Two recent passport-size photographs of the applicant.
Salary slips or payslips from the last three months.
Form 16 or income tax returns for the past three years.
ID proof (Permanent Account Number (PAN) Card, Aadhaar Card, Voter ID, or Passport).
Address proof (Driving Licence, electricity bill, telephone bill, LPG bill, water bill, or Aadhaar card.
Bank statements for the last six months.
Several factors can influence the Canara Bank car loan interest rates. These factors include the following.
Credit Score: One of the most critical factors in determining the interest rate is the applicant's credit score. A higher credit score indicates a strong credit history, which can lead to lower interest rates. On the other hand, a lower credit score may result in higher interest rates as it may be perceived as a higher risk for the bank.
Loan Amount: The loan amount requested by the borrower also plays a role in setting the interest rate. Generally, larger loan amounts might attract slightly higher interest rates compared to smaller loans. It is because larger loans present a higher risk for the bank.
Loan Tenure: The period for which the borrower takes the loan is known as the loan tenure. Longer loan tenures may attract higher interest rates compared to short loan tenures. Shorter tenures imply a quicker repayment, which can be considered less risky for the bank.
Type of Vehicle: Canara Bank offers car loans for both new and used vehicles. The interest rates may vary based on the type of vehicle being financed. New car loans might have lower interest rates compared to used car loans due to the perceived higher value and lower depreciation risk of new vehicles.
Income and Employment Stability: The borrower's income and employment stability are crucial factors in determining the interest rate. A stable income source and a consistent employment history can positively impact the interest rate, as it reflects the borrower's ability to repay the loan.
Relationship with Canara Bank: Existing customers with a good banking relationship may be eligible for special benefits and preferential interest rates on their car loans. Having a history of timely repayments and other banking products with the bank can be advantageous.
Market Conditions: External economic factors and market conditions can influence interest rates across the banking industry. Fluctuations in the economy, inflation rates, and monetary policies set by the central bank can affect interest rates for car loans.
Down Payment: Making a substantial down payment for the car can also influence the interest rate. A larger down payment can lower the loan amount, reducing the perceived risk for the bank and potentially resulting in a more competitive interest rate.
The following table lists the car loan interest rates (as of July 2023) of various banks in India.
Car Loan Interest Rate (Per Annum)
State Bank of India
Bank of Baroda
Union Bank of India
8.85% onwards (Rack Interest)
Punjab National Bank
Kotak Mahindra Bank
Bank of India
The Canara Bank car loan interest rates in 2023 start at 8.80%.
Yes, Canara Bank offers different interest rates for new and used car loans. Generally, the interest rates for new cars may be lower compared to used cars due to the perceived value and depreciation risks.
While the interest rates are determined based on various factors, it is possible to negotiate the rate to some extent, especially if you have a good credit score and a strong repayment history with the bank.
Maintaining a good credit score, having a stable income source, and making a substantial down payment can improve your chances of securing a lower interest rate on your Canara Bank car loan.
Disclaimer: The above content is for informational purposes only. It is recommended to take the help of an expert before making a decision.
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