New Delhi: After the big exemption in income tax announced in Budget 2025, the middle class received another gift, thus time from the Reserve Bank of India (RBI). New RBI Governor on Friday announced that the Monetary Policy Committee (MPC) has decided to reduce Repo rate (short-term lending rate) by 25 bps to 6.25 per cent. Following the rate cut, home loan, car loan, personal loan and business loan could become cheaper.
The EMIs of existing loan customers are also expected to reduce. Now, it will all depend upon the decision of the banks. Whether they opt to reduce interest rates on home, car and other loans. In this article, let’s take some examples which would help give a picture of EMIs if the lenders go ahead with interest rate cuts.
Home Loan
Home loan amount: Rs 25,00,000
Loan tenure: 20 years
Present Interest rate 8.75%
Currently EMI is Rs 22,093 per month
What could be the scenario if interest rate is reduced
| Home Loan amount | Rs 25,00,000 |
| Loan tenure | 20 years |
| Estimated New interest rates | 8.50% |
| Estimated New EMI | Rs 21696 |
Car Loan
Car Loan Amount: Rs 8,00,000
Loan tenure: 7 years
Current interest rate: 9.05%
Current EMI: Rs 12,892
What could be the scenario if interest rate is reduced
| Home Loan amount | Rs 8,00,000 |
| Loan tenure | 7 years |
| Estimated New interest rates | 8.70% |
| Estimated New EMI | Rs 12,790 |
Let’s see the existing car loan interest rate of banks (Source: Bankbazaar)
| Name of the Bank | Interest Rate (p.a.) |
| SBI | 9.10% p.a. onwards |
| Indian Overseas Bank | 8.85% p.a. onwards |
| Jammu Kashmir Bank | RLLR + 0.75% p.a. onwards (floating) RLLR + 0.25% p.a. onwards (fixed) |
| Canara Bank | 8.70% p.a. onwards |
| HDFC Bank | 9.40% p.a. onwards (Rack Interest) |
| ICICI Bank | 9.10% p.a. onwards |
| Karur Vysya Bank | 9.60% p.a. onwards |
| South Indian Bank | 8.75% p.a. onwards |
| IDBI Bank | 8.90% p.a. onwards (floating) 9.20% p.a. onwards (fixed) |
| Yes Bank | Contact the bank |
| Karnataka Bank | 8.88% p.a. onwards |
| Federal Bank | 8.85% p.a. onwards |
| PNB | Floating: 8.75% p.a. onwards Fixed: 9.75% p.a. onwards |
| Union Bank of India | 8.70% p.a. onwards |
| Axis Bank | 9.30% p.a. onwards |
| Bank of Baroda | Fixed: 9.05% p.a. onwards Floating: 9.40% p.a. onwards |
| Bank of India | 8.85% p.a. onwards |
Existing Home Loan interest rates (Source: Bankbazaar)
| Banks | Starting Interest Rate (p.a.) |
| Kotak Mahindra Bank | 8.75% p.a. onwards |
| Union Bank of India | 8.35% p.a. onwards |
| Bank of Baroda | 8.40% p.a. onwards |
| Central Bank of India | 8.50% p.a. onwards |
| Bank of India | 8.40% p.a. onwards |
| State Bank of India | 8.50% p.a. onwards |
| HDFC Bank | 8.75% p.a. onwards |
| LIC Housing Finance | 8.50% p.a. onwards |
| Axis Bank | 8.75% p.a. onwards |
| Canara Bank | 8.40% p.a. onwards |
| Punjab and Sind Bank | 8.50% p.a. onwards |
| IDFC First Bank | 8.85% p.a. onwards |
| Bank of Maharashtra | 8.35% p.a. onwards |
| Punjab National Bank | 8.40% p.a. onwards |
| IDBI Bank | 8.50% p.a. onwards |
| HSBC Bank | 8.50% p.a. onwards |
| Karur Vysya Bank | 9.00% p.a. onwards |
Experts believe that the repo rate cut by 25 basis points by the RBI will give a long-awaited relief on interest rates and also be supportive of economic growth.
Repo rate is the interest rate at which the RBI lends money to commercial banks. The Monetary Policy Committee, headed by RBI Governor Sanjay Malhotra, slashed the repo rate by 25 basis points to 6.25 per cent. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
