Repo Rate Increased: This month many companies have increased the prices of the car. On the other hand, the Reserve Bank of India (RBI) has also increased the repo rate. The interest rate has been increased by 40bps (basic points). The effect of this will be that now the monthly installment (EMI) of the vehicle which is taken on loan will be higher. That is, buying a car on loan will become expensive. Now those who buy cars, bikes, scooters with the help of vehicle loan will find it expensive.
Repo rate was increased four years ago
Repo rate is the amount given by RBI to commercial banks. An increase in this means an increase in the interest rate which will increase people’s EMI more than before. The repo rate was last increased to 4% in August 2018, which has now been reduced to 4.40% after almost 4 years.
The situation in the passenger vehicle segment is worse than before
On the increase in the repo rate, FADA President Vinkesh Gulati said that due to the increase in the repo rate by 40bps by the RBI, it has become expensive for everyone to take auto loans. Due to the long waiting period, where the problems of the passenger vehicle segment have increased. The two-wheeler segment is not performing well in rural areas. In such a situation, after the increase in the price of two-wheelers, now it has become more expensive to buy them due to the increase in the repo rate.
EMI will remain same on extension of loan tenure
If you do not want to let the EMI burden increase on yourself, then your bank can extend your loan tenure by keeping the same EMI as before. Meaning the loan you had taken earlier for 160 months can be done for 162 or 165 months. The increase in the repo rate by RBI will increase the EMI of other loans like your home and car loan. Because banks usually pass on the burden of the increased repo rate to the customers instead of bearing it themselves.