Loan Calculator: RBI has reduced the repo rate by 0.50%, making it 5.50%. This is likely to reduce the interest rates on home and car loans.
New Delhi. The Reserve Bank of India (RBI) has cut the repo rate by 0.50 percent. With this cut, the repo rate has now come down to 5.50 percent. With the reduction in repo rate, the possibility of reduction in interest on home and car loans has also increased. If banks reduce their home and car loan interest rates according to the 0.50 percent cut in the repo rate, then customers will benefit a lot. After the cut in repo rate, every person taking a home loan wants to know how much his EMI will reduce and how much will be the reduction in the total interest amount to be paid.
It is important to know here that after the 0.50 percent cut in the repo rate, the interest rates of home loans and car loans etc. will not automatically decrease. It depends on the banks when and how much they reduce the interest rates. Last time, despite the reduction of 0.25 percent in the repo rate, many banks did not reduce the interest rates. Banks can reduce the interest rate by 0.50% or they can also reduce the interest rate of home or other loans by 0.25%. Or they can keep the interest rate as it is.
After RBI’s 0.50% reduction in repo rate, if any bank reduces the home loan interest rate by the same amount, then customers will benefit a lot. If a customer is currently paying 8% interest on a home loan of Rs 50 lakh for 20 years, then his EMI comes to around Rs 41822. In the total period, he will have to pay Rs 50,37,280 as interest and the total payment including principal and interest will be Rs 1,00,37,280.
Now if the interest rate on this loan falls by 0.50% to 7.50%, then the EMI of a customer’s 20-year loan of Rs 50 lakh will become Rs 40,280. The total interest payment in 20 years will be Rs 46,67,200. Similarly, a total of Rs 96,67,200 will have to be paid to the bank by combining the principal and interest.
EMI will be reduced by Rs 1542, interest will be reduced by Rs 3.70 lakh
If the interest rate on a 20-year loan of Rs 50 lakh becomes 7.50 percent instead of 8 percent after the repo rate cut, then your EMI will be reduced by about Rs 1,542 per month. In this way, you will have to pay Rs 3.70 lakh less interest on the entire loan.
