When Inflation is high, lending rates also go up! So far India has always been affected by this and common people like us have to bear the brunt of it.
But with the recent good run Indian Banking system has successfully come back on track and hence the RBI has decided to do something about it which will help the customers.
The Reserve Bank of India conducted its third bi-monthly Monetary Policy Statement for 2019-20 on 7th August 2019. Here are the findings:
- Repo rate has been deducted by 0.35% and now stands at 5.40%
- The repo rate prior to the rate cut was 5.75%.
- Since January 2019 the rate has been deducted by 1.10%.
- This means home loan rates and car loan rates will also be deducted.
- SBI has cut its home loan rates to 8.25% from 8.40%
- HDFC Bank has cut its home loan rates to 8.60%
- Many other Banks are following suit in deducting rates.
What does this mean for the common man?
In simple words,
- Your loan deal will get better with lower interest rates.
- You will save a lot of interest money that means lakhs of rupees over the whole loan tenure (up to 20 years).
What can you do to get the best loan deal?
Just because Banks reduced their loan interest rates it doesn’t mean you will get the same for yourself. You need to remember that Banks only offer these rates to customers that fit their criteria. For that you will need to fulfill all their criteria.
What’s part of their loan eligibility criteria?
The Banks check for few things in your profile before deciding what interest rate can be provided to you. These are;
- Your salary statement for the past 6-12 months to see income stability.
- Your IT returns from past 1-2 years.
- Your credit score (higher the better).
- Any bad debts, late payments, default in credit history.
- Loan amount requirement and your eligibility.
*There can be more eligibility criteria but it will vary from Bank to Bank.
What if I cannot fulfill their loan criteria completely?
Banks take their criteria very seriously. If you cannot fulfill it completely, you will not get their best interest rates. You might get a slightly larger interest rate. So please ensure to pay all your bills on time and never ever default or be late in paying your debts.