Loan EMIs to Get Cheaper! RBI Cuts Repo Rate to 6% – Here’s How Much You’ll Save

Indian borrowers have a reason to cheer as the Reserve Bank of India (RBI) has announced a 25 basis points (0.25%) cut in the repo rate, bringing it down to 6%. This is the second consecutive rate cut by the central bank this year, and it promises direct relief for millions of loan borrowers across the country.

RBI Governor Sanjay Malhotra, in his latest monetary policy announcement, stated that the move aims to support economic growth and ease financial pressure on individuals and businesses alike.

What Does This Mean for You?

The repo rate is the rate at which the RBI lends money to commercial banks. When this rate drops, banks often lower their lending rates in response, which leads to cheaper loans for consumers.

This repo rate cut will reduce interest rates on various loans including:

• Home Loans

• Car Loans

• Personal Loans

• Business Loans

As a result, borrowers will now pay lower EMIs (Equated Monthly Installments) compared to before. The savings may vary depending on your loan amount, tenure, and the type of interest rate (fixed or floating) you have.

Example: How Much EMI Will You Save?

Let’s consider a home loan of ₹30 lakh for a tenure of 20 years at an interest rate of 9%, which now gets reduced to 8.75% after the rate cut.

• Old EMI at 9%: ₹26,992

• New EMI at 8.75%: ₹26,259

• Monthly Savings: ₹733

• Total Savings Over 20 Years: ₹1.75 lakh (approx.)

Even a small change in interest rate can lead to substantial long-term savings, especially for large-ticket loans like housing or business loans.

Why This Cut Matters Now

The RBI’s move comes at a time when the global economy faces uncertainties, including ongoing trade challenges like the Trump Tariff War. In such a scenario, this monetary easing step is seen as critical to:

• Maintaining economic momentum

• Stimulating consumer spending

• Boosting real estate and auto sectors

• Offering relief to debt-laden households and businesses

For everyday consumers, this translates into more disposable income and a greater ability to manage finances during uncertain times.

Who Benefits the Most?

• New Borrowers: They will get loans at lower interest rates immediately.

• Existing Borrowers with Floating Rate Loans: Their interest rates and EMIs will automatically adjust downward.

• Fixed Rate Loan Holders: They may not benefit unless they refinance or negotiate a new deal.

What Should You Do Now?

• If you have a floating-rate loan, wait for your bank to pass on the benefit.

• Consider refinancing your loan if your lender doesn’t reduce the rate.

• For new loans, this is a good time to compare offers and lock in lower rates.

• Use online EMI calculators to plan your savings and prepayment strategy.

Final Thoughts

RBI’s second repo rate cut of 2025 is a welcome move for borrowers. Whether you're planning to buy a new house, upgrade your car, or take a personal loan, this reduction in EMIs could significantly ease your financial burden.

Keep an eye on your bank’s next announcement—they may soon start adjusting their lending rates in line with the RBI's decision.