Repo Rate 2025: The central bank reduced the repo rate by 25 basis points to 5.25%. This step will reduce the EMI of home, car and personal loans. GDP growth is expected to increase to 7.3% and inflation to be only 2% in FY26, which will make it easier to take loans.
RBI Repo Rate Cut Impact on Loan EMI: Today, on December 5, the Reserve Bank reduced the repo rate by 25 basis points to the new rate of 5.25%. This step is being considered as good news for the common people and loan takers. The impact of this decision will be directly visible on home loan, car loan and personal loan. Let us understand how much this decision taken in the RBI Monetary Policy meeting will affect you, how much your EMI can reduce and which loans will be cheaper?
Who gets the benefit of repo rate cut?
Repo rate is the rate at which RBI lends to banks. When this rate decreases, banks get cheaper money, banks pass this benefit on to the customers i.e. EMI of home, car, personal loan decreases.
How much can EMI reduce due to reduction in repo rate?
If you have taken a home loan of Rs 20 lakh for 20 years, then after the new deduction, its EMI can be reduced by around Rs 310 every month. Similarly, on a loan of Rs 30 lakh, EMI can be reduced by approximately Rs 465. Those taking car loan or personal loan will also see savings. This relief will be applicable for both new and existing customers.
How much cheaper will car loans become due to reduction in repo rates?
If you have taken a car loan of Rs 10 lakh for 5 years and are still paying EMI of Rs 19,000, then the new EMI can be Rs 18,750. That means monthly savings can be Rs 250.
What will be the impact on personal loan due to reduction in repo rate?
Suppose you have a personal loan of Rs 5 lakh for 3 years and you are paying EMI of Rs 15,100 every month, then the new EMI can be Rs 14,950, that is, the total savings can be up to Rs 150 per month.
Which loans will become cheaper due to reduction in repo rate?
Home loan borrowers will get the biggest benefit of this rate cut, especially on long term loans. Apart from this, there may be a slight reduction in car loan for 3 to 5 years and those taking personal loans will also get some relief. Even students taking education loans and their parents will be able to take advantage of this deduction.
Impact of RBI cuts on market and economy
- Liquidity will increase, banks will give loans easily.
- Credit demand will increase, new purchases will become easier.
- RBI increases GDP growth to 7.3% in FY26
- Inflation will reduce. FY26 CPI at 2%, Q3FY26 at 0.6%
- There may be positive sentiments in the market. Expected growth in share market and real estate.