Car EMI will increase
The hike in repo rate will have a direct impact on loan borrowers who are planning to take a car loan, home loan, personal loan or gold loan in the near future. This will increase the EMI or interest rate paid on the loan. However, for those already paying EMIs, the old interest rate will be applicable. Let us know in detail how the increase in repo rate will affect the EMI of the car.
How much will the EMI increase?
With the increase in the repo rate, car loan borrowers will now have to pay more interest. Suppose a person who has made up his mind to buy a car at the beginning of this month but due to some reason he could not buy the car, then now he will have to pay more interest.
Had that person bought the VXI variant of the Maruti Alto which is priced at Rs 4.28 lakh ex-showroom earlier this month, he would have to pay an EMI of Rs 7,295 per month for 7 years at the rate of 8 per cent. But if he is planning to buy a car now, he will have to pay an interest rate of 8.5 per cent. Accordingly, he will have to pay an EMI of Rs 7,412 every month at the rate of 8.9 per cent. In this way he will have to pay Rs 117 more in one month and Rs 1,404 more in 12 months. At the same time, in seven years, he will have to pay a total of Rs 9,828 more.
What is Repo Rate?
The rate at which RBI gives loans to commercial banks is called repo rate. The increase in the repo rate means that the RBI will now charge more interest for lending to banks. With this effect, banks will now charge a higher rate of interest on the loans given to their customers. This will increase the interest rate on all types of loans given by banks including home loans, car loans, personal loans. Due to this, people taking loans will have to pay more EMI. Let us tell you, RBI keeps on changing the repo rate from time to time to control the flow of cash in the market.
Keep these things in mind while taking a loan
Before taking any kind of loan from banks, calculate how much installment you will have to pay every month, that is, how much your EMI will come. With this you will be able to know how much you have the ability to take a loan. If you are going to take a car loan, then you can plan it well in advance.
If you know the loan amount, tenure and total repayment amount in advance before buying a car, then you will be able to avail the loan and plan your expenses in a better way. You can make a down payment of half the cost of the car or plan a pre-payment as well.