RBI Rate Cut: Double Relief for Borrowers and Middle Class

TECH

By Aniket Chakraborty Feb 7, 2025 Arrow

EMIs to Drop for New Borrowers: Home, auto, and personal loan EMIs are set to become cheaper for new borrowers following the rate cut.

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Savings Example: A Rs 50 lakh home loan at 8.5% now saves Rs 607 monthly, translating to Rs 7,284 annually.

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Impact on Floating Rate Loans: Only borrowers with floating rate loans will benefit; fixed rate borrowers won't see EMI reductions.

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Personal Loan Relief: For a Rs 5 lakh personal loan, the EMI reduces by Rs 133 monthly, saving Rs 1,596 annually.

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Car Loan Savings: A Rs 10 lakh car loan saves Rs 152 monthly, or Rs 1,824 annually, after the rate cut.

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First Rate Cut Since 2020: This is the RBI’s first interest rate cut since May 2020, signaling a shift towards lower borrowing costs.

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Combined Savings for Middle Class: Tax relief and lower EMIs together offer a significant savings boost for the middle class.

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When Will EMIs Be Lower?: The transmission of the rate cut will take 3 to 4 months, as banks adjust their rates.

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Income Tax and EMI Relief Together: The combination of reduced taxes and lower EMIs could save up to Rs 13,389 monthly for high-income earners.

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