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Planning to buy a car? Check how RBI repo rate hike impacts your 10 lakh car loan EMI
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News18•07-10-2026, 14:24
Planning to buy a car? Check how RBI repo rate hike impacts your 10 lakh car loan EMI
- •The RBI has increased the repo rate by 0.25 percent to 5.50 percent, which may increase EMI burdens for floating interest rate borrowers.
- •For a Rs 10 lakh car loan over 5 years at 9 percent, a hike to 9.25 percent will increase the monthly EMI by about Rs 117 to Rs 20,875.
- •Floating rate loans are impacted faster by repo rate changes, whereas fixed-rate loans do not see an immediate change in installments.
- •Borrowers should check their credit score before applying and negotiate for better interest rates based on a strong financial profile.
- •Always compare processing fees, pre-payment charges, and loan terms across multiple lenders before finalizing a car loan.
Key Questions Answered
The Reserve Bank of India increased the repo rate by 0.25 percent, raising it from 5.25 percent to 5.50 percent, which can cause car loan EMIs to become more expensive if banks pass on the hike.
For a Rs 10 lakh car loan taken for 5 years at an initial interest rate of 9 percent, a rate increase to 9.25 percent would raise the monthly installment by approximately Rs 117, adding about Rs 1,404 extra over a year.
The most direct impact is seen on floating-rate loans, especially those linked to external benchmarks where interest rate changes are reflected sooner, whereas fixed-rate loans do not have an immediate change in their EMIs.
