RBI rate cut: Check how much you can save on home and auto loan EMIs with a 6% repo rate

The Reserve Bank of India reduced the repo rate by 25 basis points to 6.00% on Wednesday. This marks the second consecutive repo rate cut by the central bank, aligning with market expectations and bringing borrowing costs to their lowest level since November 2022.

In February 2025, the RBI lowered its key repo rate by 25 basis points to 6.25% for the first time since May 2020.

As per experts, the RBI’s latest move is likely to cheer borrowers across India, including those who have taken home loans, car loans, MSME loans, and other retail floating-rate loan borrowings, as the banks are expected to slash interest rates.

Retail floating loans after October 2019 are linked to an external benchmark, usually the repo rate, meaning loan EMIs adjust with changes in the repo rate. Domestic banks typically pass on these benefits to borrowers in part or full, depending on their interest reset cycle, which is usually within 3 to 6 month period.

How much will you save on home loan EMIs

Homebuyers across India who are eligible for floating interest rate home loans may see their interest rates going down by up to 25 basis points, in line with the RBI’s announcement.

Here is how much you can save each year on home loans of ₹20 lakh, ₹30 lakh and ₹50 lakh, assuming that the tenure is 20 years and the average median interest rate of 8.5% (before the repo rate cut).

Auto loan EMIs savings

The repo rate cut is also likely to benefit those who have taken a car or a two-wheeler loan, which also falls under the retail loan category. Auto loan borrowers may also see their interest rates going down by 25 basis points (0.25%), provided that the bank passes on the full benefit to them.

Here is how much auto loan borrowers can save on loans of ₹5 lakh, ₹7 lakh, and ₹10 lakh, given that the tenure is five years and an average median interest rate of 9.2% per annum (before the repo rate cut).

RBI’s decision to slash the repo rate comes amid a challenging global economic scenario after the US government imposed higher reciprocal taxes on Indian exports. As per the RBI Governor's statement, US reciprocal tariffs will have a negative impact on India's exports and domestic growth. The central bank is closely monitoring inflation risks arising from these developments.

RBI Governor said “First and foremost, uncertainty in itself dampens growth by affecting investment and spending decisions of businesses and households. Second, the dent on global growth due to trade frictions will impede domestic growth. Third, higher tariffs shall have a negative impact on net exports.”