Repurchase Rates & Loan EMI: How the future RBI repurchase rate cuts affect your home, car and personal loan EMI
Repurchase rate and loan EMI: At the Monetary Policy Committee (MPC) meeting in February, April and June this year, borrowers received a huge relief from the Reserve Bank of India (RBI) as the central bank’s cumulative tax rate was reduced by 100 basis points. The obvious tax rate cuts translates into cheaper loans, as monthly installments (EMI) are also cut.
By contrast, at the MPC meeting on Wednesday, Reserve Bank of India Governor Sanjay Malhotra stopped lowering the tax rate, maintaining a 5.5% buyback rate.
He said the ongoing tariff tensions with the United States were the reason behind the pause.
This means that the EMI of the loan with the reply rate will not change.
However, the three MPC meetings held in this fiscal year still have a high possibility of lowering the tax rate.
The next meeting is scheduled to be from September 29 to October 1.
Subsequent meetings will be held in December this year and February next year.
If the RBI lowers the repurchase rate by up to 50 basis points and these exchange rates will be reflected in bank loans, find out in this article how much money you can save on your home, car and personal loans.
Condition 1: If MPC is reduced by 0.25%
Home loan EMI
Let’s take a 7.5% interest rate as an example of a 20-year home loan
| Loan amount | Before EMI | The emi after | Savings/year |
| Rs 2 million | Rs 16,112 | Rs 15,808 | Rs 3,648 |
| 3 million | Rs 24,168 | Rs 23,711 | Rs 5,484 |
| Rs 5 million | Rs 40,280 | 39,519 rupees | Rs 9,132 |
Automatic loan EMI
Let’s take a 9% interest rate as an example of a 5-year car loan.
| Loan amount | Before EMI | The emi after | Savings/year |
| 3 lakh rupees | Rs 6,228 | Rs 6,191 | 444 rupees |
| Rs 5 lakh | Rs 10,379 | Rs 10,319 | 720 rupees |
| Rs 1 million | Rs 20,758 | Rs 20,637 | Rs 1,452 |
Personal loan EMI
Let’s take a 1-year personal loan as an example and a 10.10% interest rate as an example.
| Loan amount | Before EMI | The emi after | Savings/year |
| Rs 2 lakh | Rs 17,592 | Rs 17,569 | Rs 276 |
| 3 lakh rupees | Rs 26,389 | Rs 26,354 | 420 rupees |
| Rs 5 lakh | Rs 43,981 | Rs 43,923 | 696 rupees |
Condition 2: If MPC is reduced by 0.50%
Home loan EMI
Let’s take a 7.5% interest rate as an example of a 20-year home loan.
| Loan amount | Before EMI | The emi after | Savings/year |
| Rs 2 million | Rs 16,112 | Rs 15,506 | Rs 7,272 |
| 3 million rupees | Rs 24,168 | Rs 23,259 | Rs 10,908 |
| Rs 5 million | Rs 40,280 | Rs 38,765 | Rs 18,180 |
Automatic loan EMI
Let’s take a 9% interest rate as an example of a 5-year car loan.
| Loan amount | Before EMI | The emi after | Savings/year |
| 3 lakh rupees | Rs 6,228 | Rs 6,155 | 876 rupees |
| Rs 5 lakh | Rs 10,379 | Rs 10,258 | Rs 1,452 |
| Rs 1 million | Rs 20,758 | Rs 20,517 | Rs 2,892 |
Personal loan EMI
Let’s take a 1-year personal loan as an example and a 10.10% interest rate as an example.
| Loan amount | Before EMI | The emi after | Savings/year |
| Rs 2 lakh | Rs 17,592 | Rs 17,546 | 552 rupees |
| 3 lakh rupees | Rs 26,389 | Rs 26,319 | 840 rupees |
| Rs 5 lakh | Rs 43,981 | Rs 43,865 | Rs 1,392 |
(Disclaimer: These are estimates and actual lowering of loan rates may vary. The Reserve Bank of India lowered its repurchase rate.)
