Home Auto Loan EMI: Giving a big gift to the customers, the Reserve Bank has reduced the repo rate for the second time in 2 months. Its direct benefit will be available on all types of retail loans including home and auto loans. After this reduction, your EMI will also be reduced by thousands of rupees.
As soon as the Reserve Bank got a new governor, the common man got a lot of happiness. Within just 2 months, the interest rates of banks have come down by 0.50 percent, because the new RBI governor Sanjay Malhotra has reduced the repo rate by 0.25 percent for the second consecutive time in April after February. This will have a direct impact on the EMI of your loan. Whether your loan is old or you are thinking of taking a new loan. All government and private banks have linked the interest rates of most loans to the repo rate. Therefore, the customers start getting the benefit of the reduction in it immediately.
With the reduction in the repo rate, the calculation has also started in the mind of the common man that how much money will he save on EMI. How much will the EMI on your home loan and auto loan reduce after the reduction of 0.50 percent in the interest rates of the loan till the year 2025. After this reduction in repo rate, we are presenting the savings figures through 2 figures of home and auto loans, which will make it easier for you to understand how much benefit this decision of RBI will actually bring.
How much savings on a home loan of Rs 50 lakh
Suppose before February the interest rate of your home loan was 8.50%, which has now come down to 8%. In this sense, if you had taken a home loan of Rs 50 lakh for 20 years, then the EMI every month would have been Rs 43,391. At this interest rate, you would have had to pay Rs 54,13,878 as interest only during the entire tenure. But, after the reduction in interest rate by 0.50%, the effective rate of home loan became 8% and your EMI came down to Rs 41,822.
How much will be the benefit
With a 0.50% reduction in the interest rate, the EMI of a home loan of Rs 50 lakhs got reduced by Rs 1,569 per month. In this way, you will save Rs 18,828 in a year. If we talk about the entire tenure, you will have to pay only Rs 50,37,280 as interest. Hence, after this reduction, your total savings in the form of interest will be Rs 3,76,598.
How much benefit on an auto loan of Rs 10 lakh
If you had taken an auto loan of Rs 10 lakh for 5 years at 9% interest, then your EMI used to be Rs 20,758 per month before February. But, after a reduction of 0.50% in it, now your EMI will be reduced to Rs 20,517. In this way, Rs 241 will be saved on EMI every month and the saving for the whole year will be Rs 2,892. Talking about the entire tenure, now you will have to pay only Rs 2,30,992 lakh as interest, which was Rs 2,45,501 earlier. In this way, you will be able to save interest of Rs 14,509 in the entire tenure.
What do the experts say
Chintan Sheth, Chairman and MD of Seth Realty, says that the reduction in repo rate is a positive sign for the entire real estate sector. The MPC’s decision to reduce interest rates will make home loans more affordable, which will lead people to buy homes. This move will benefit the affordable, mid-income and premium segments. The rate cut will also benefit developers and help complete projects. Overall, we can see this move as boosting demand, strengthening buyer sentiment and contributing to continued growth in the housing market.
