Cheaper loans in 2025: Canara, PNB, BoB cut RLLR; Check new home loan rates

Following the Reserve Bank of India's repo rate cut, Canara Bank has reduced its home and car loan interest rates. The revised home loan rates start at 7.40%, while car loan rates begin at 7.70%.

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Cheaper Home Loan Interest Rates

Canara Bank cuts home and auto loan rates after RBI's repo rate reduction. Borrowers benefit from lower rates, starting at 7.40% for home loans and 7.70% for auto loans. The RLLR is now 8.25%, down from 8.75%.

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Home and Car Loans are Now Cheaper

Customers seeking new loans or refinancing existing ones are likely to benefit from these revised rates. Previously, Canara Bank's minimum home loan rate was 7.90%, which has now been reduced to 7.40%, making EMIs lighter. Similarly, car loans, earlier charged at 8.20%, are now available at 7.70%.

This rate reduction trend is becoming increasingly common as public sector banks respond to the Reserve Bank's repo rate cut. For middle-class families in semi-urban and rural areas, such moves bring real savings and better financial access.

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Rate Cuts by Other Public Banks

Canara Bank isn't the only bank reducing lending rates. In a competitive move, other major government banks have also lowered their lending rates. Punjab National Bank (PNB) and Bank of India have reduced their RLLR from 8.85% to 8.35%.

Similarly, Bank of Baroda has cut its RLLR from 8.65% to 8.15%. This competition among banks ultimately benefits customers, providing them with more attractive loan options with reduced EMIs and easier repayment terms.

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Which One is Right for You?

When applying for a home loan, borrowers need to choose between floating, fixed, or repo-linked rates. Floating rate loans are suitable for those who can withstand market fluctuations, as EMIs can rise or fall depending on bank rate changes. On the other hand, fixed-rate loans offer stability by locking in a constant EMI throughout the tenure.

The repo-linked loan, now widely used and encouraged by the RBI since 2019, is directly linked to the central bank's repo rate. This ensures that any RBI interest rate cut is quickly reflected in the borrower's loan EMI, providing faster benefits.

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Repo-Linked Loans

Since October 2019, the RBI has mandated banks to link all new retail loans to external benchmarks like the repo rate. The key objective is transparency and faster transmission of monetary policy decisions to the public. Canara Bank's recent interest rate cut is a prime example of this system working efficiently.

For borrowers, repo-linked loans offer timely relief during rate cuts, ensuring their EMIs reduce without delay. For risk-averse customers, fixed-rate options still exist. It's also worth noting that banks must allow customers to switch between fixed and floating options, sometimes with a nominal fee.