Great news for loan borrowers, your EMI may become cheaper soon, know when and why

News India Live, Digital Desk: If you are tired of paying huge EMIs for home loan, car loan or personal loan, then there may be relief news for you. Amidst signs of reduction in inflation in the country, it is expected that the Reserve Bank of India (RBI) may soon cut its interest rates. If this happens, it will have a direct impact on your pocket and the loan installments (EMI) will become cheaper.

Why are there signs of EMI becoming cheaper?

In fact, in many big reports monitoring the economic condition of the country, it is being claimed that RBI may take a decision to cut the repo rate in the next few months. According to a research report by State Bank of India (SBI), in view of the softening of retail inflation, the Reserve Bank may start the process of reducing interest rates in the beginning of 2025.

When inflation is very high in the country, RBI increases the repo rate to control it. Due to this, it becomes expensive for the banks to take loan from RBI and then the banks also make the loan expensive for the customers. Now that inflation is coming down, RBI can reduce the repo rate, so that the flow of money in the market increases and economic activities gain momentum.

What is repo rate and what is its connection with your EMI?

Repo rate is the rate at which RBI gives loans to the rest of the banks of the country. When the repo rate is low, banks get cheaper loans, the benefit of which they pass on to their customers by providing home loans, car loans and personal loans at cheaper interest rates. This simply means reducing your EMI burden.

Since when have interest rates not changed?

Let us tell you that the Monetary Policy Committee (MPC) of the Reserve Bank of India has kept the repo rate constant at 6.50% from February 2023. This means that there has been no major relief in your EMI for more than one and a half years. But now the way inflation seems to be coming under control, a new ray of hope has arisen.

Although, the final decision on this will be taken only in the upcoming meetings of RBI, but experts believe that ‘good days’ are not far for the loan takers.