Car Loan EMI Calculator: What Changes After A RBI Repo Rate Hike? Check Your New EMI

The RBI has raised the repo rate by 25 basis points to 5.50%, Governor Sanjay Malhotra announced on Wednesday. The Monetary Policy Committee (MPC) held its three-day meeting from Oct. 5 to 7 and reviewed inflation, economic growth and other factors before taking the decision.

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The move comes amid fresh tensions in the Middle East, higher crude oil prices and concerns over food inflation. Consumer inflation rose to 4.82% in August, staying above the RBI's 4% target for the third straight month.

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For borrowers, the rate hike could make retail loans, including car and home loans, more expensive. If banks pass on the increase, borrowers with floating-rate loans could see their interest rates and EMIs rise.

What Changes For Car Loans?

The impact of the RBI rate hike will depend on whether your car loan has a fixed or floating interest rate. Indian lenders usually offer car loans at around 7% per annum with tenure ranging up to five to seven years.

Fixed-rate loan: Your interest rate and EMI generally remain unchanged even after the RBI hikes the repo rate. This means that your interest rate is likely to remain the same and the rate hike will not impact your EMI.

Floating-rate loan: The interest rate can change when the benchmark rate moves. If your lender passes on the 25-basis-point hike, your car loan rate could rise. This could lead to a higher EMI or a longer repayment period.

Car Loan EMI Calculator:

Assuming you have a floating rate linked loan for 5 years at 7.5% rate. If your lender passes on 0.25% hike, you EMI will become:

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