Despite the RBI’s decision to hold the repo rate steady, the cumulative effect of previous cuts has led to a 1% decrease in the past year. This benefits consumers seeking car loans, with several banks adjusting their interest rates accordingly. A 1% reduction in the interest rate can significantly reduce the monthly payments for car loans, which translates into notable savings.
For a car loan of 15 lakh rupees, at an interest rate of 10.15%, the EMI over 7 years amounts to approximately 25,018 rupees. If the interest rate decreases by 1%, the new rate would be 9.25%, reducing the EMI to around 24,248 rupees, resulting in monthly savings of 770 rupees. Similarly, on a 12 lakh loan, the monthly EMI would decrease from 20,015 rupees to 19,398 rupees, saving 617 rupees per month. For a 10 lakh loan, the EMI would decrease from 16,679 rupees to 16,165 rupees, with monthly savings of approximately 514 rupees.