💡 Introduction
The Reserve Bank of India (RBI) has recently announced a repo rate cut from 6% to 5.5%, effective from June 6.
This decision is great news for existing loan borrowers and new applicants, as it directly impacts home loans, personal loans, and business loans.
But the key question is — should you reduce your EMI or shorten your loan tenure to become debt-free faster? Let’s break it down.
🏦 What Is the Repo Rate?
The repo rate is the rate at which the RBI lends money to commercial banks.
When the repo rate decreases, banks can borrow funds at cheaper rates, which eventually leads to lower loan interest rates for customers.
So, this reduction means your EMI may go down, or you can choose to repay your loan faster.
📊 Impact of the Repo Rate Cut on Borrowers
A repo rate cut has a direct impact on all floating-rate loans. Here’s how:
✅ Home Loans: Interest rates are expected to drop, helping new borrowers get cheaper EMIs.
✅ Personal Loans: Slightly lower interest costs for existing and new applicants.
✅ Business Loans: Easier access to funds for startups and SMEs at affordable rates.
💭 Reduce EMI or Shorten Tenure — What’s Better?
Option 1: Reduce Your EMI
If you choose to keep your loan tenure the same, your monthly EMI will decrease.
💰 This is ideal if you want to free up some cash flow and enjoy financial comfort.
Option 2: Shorten the Tenure
If you choose to keep the EMI the same, your tenure will reduce.
📉 This option helps you save big on total interest payments and become debt-free faster.
👉 Tip: If your income is stable and you can afford the same EMI, go for the shorter tenure option — you’ll save more in the long run.
🔍 Expert Advice from Shivafinz
At Shivafinz, we guide you through the right choice based on your financial profile, CIBIL score, and repayment goals.
We analyze whether your loan should be restructured, refinanced, or continued with your existing bank.
📞 Talk to our experts today to understand how this repo rate change can benefit your loan and monthly finances.
📈 Key Highlights
- 📉 Repo rate cut from 6% → 5.5% effective June 6.
- 🏦 Lower borrowing cost for banks = reduced loan interest for customers.
- 💰 Choose between lower EMI or shorter tenure.
- 💼 Ideal time to review your existing loans with expert help.
📚 Conclusion
The reduction in the repo rate is a welcome move for loan borrowers in India.
Whether you’re a homeowner, business owner, or first-time borrower, this is the perfect time to reassess your loans.
For personalized loan analysis and refinancing options, reach out to the Shivafinz team today.