The Reserve Bank of India (RBI) has announced a rate cut of 0.25 per cent in its bi-monthly Monetary Policy Statement for 2019-20 on Friday. The latest repo rate now stands at 5.15 per cent as against 5.40 per cent earlier. From October 1, most banks are lending auto and other loans at an interest rate linked to the RBI repo rate, as now they have to opt for an external benchmark. Here is the change in auto loan EMI.

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5-year auto loans EMI breakout, as per new rates: COMPARED

1. Rs 3 lakh loan: On the auto loan of Rs 3 lakh, previous EMI of Rs 6,184 will now come down to Rs 6,148, saving you Rs 432 annually.

2. Rs 5 lakh loan: On the auto loan of Rs 5 lakh, previous EMI of Rs 10,307 will now come down to Rs 10,246, saving you Rs 732 annually.

3. Rs 10 lakh loan: On the auto loan of Rs 10 lakh, previous EMI of Rs 20,613 will now come down to Rs 20,492, saving you Rs 1,452 annually.

This is the fifth straight cut in rates by the Reserve Bank in its key rates in as many policy reviews in 2019 and takes the total quantum of reductions to 1.35 per cent. Most banks have opted to go with repo rate as their external benchmark in which they have to revise the interest rate on loan at least once in 3 months. This is expected to ensure faster transmission of repo rate cuts to the borrowers.

The new rate is also the lowest in 9 years since April 2010 and is expected to boost growth, which slowed to as low as 5 per cent in June quarter and is expected to propel demand in the ongoing festive season.