RBI Repo Rate Cut: How Much Will Your Home, Auto & Personal Loan EMI Drop?

RBI Repo Rate Cut: The Reserve Bank of India has made a key decision. It has cut the repo rate, which affects the country's economy, by 25 basis points. Let's find out what will happen with this RBI decision. 

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Decision to reduce the repo rate to 5.25%

The RBI has cut the repo rate again, bringing it to 5.25% after a 25 basis point reduction. This year's total cut is 1.25%. Let's see how this affects consumers and loan holders.

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What is the Repo Rate?

The repo rate is the interest banks pay to borrow from the RBI. Simply put: *RBI is the main bank for all banks. *Bank = Customer. *Repo Rate = Interest on RBI's loan.

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Why is the repo rate cut important?

When the economy slows, a rate cut reduces borrowing costs for banks, lowers interest on loans, boosts loan demand, increases industrial investment, and speeds up job creation.

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What are the benefits of the repo rate dropping to 5.25%?

Home loans will get cheaper. Since home loans are long-term, rate changes have a bigger impact. If the repo rate decreases: * EMI goes down * Loan tenure shortens * Overall interest burden is reduced.

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How much will the EMI on a ₹10 lakh loan decrease?

On a Rs 10 lakh loan for 15 years, a 0.25% rate cut (9% to 8.75%) saves Rs 150-Rs 250/month. If banks pass on a 0.75% cut (9% to 8.25%), you could save Rs 500-Rs 650/month.

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Which loans benefit the most?

Home loans benefit most, especially floating-rate ones. Fixed-rate personal loans aren't affected, but new loans will be cheaper. MSME loans on floating rates also see benefits.

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It's not just EMIs... it also affects FDs and RDs

A repo rate cut doesn't just lower EMIs; it can also reduce interest on FDs and RDs. It's a good time to take out cheaper home loans. Your key benefit is lower EMIs and interest.