If you are planning to buy a vehicle, then get ready to pay more EMIs every month, whether with fixed or floating rates. EMIs rates will be going to increase soon when RBI decided to increase the key interest repo rate by 50 basis points.
Repo rate is the rate at which RBI lends fund to commercial banks. Increase in the repo rate means borrowing becomes costlier for bank. In result, bank will increase their lending rates.
The existing loans will not become costlier which have fixed rates, however, the new loans will become expensive.
The rise in lending rates will affect the auto industry which is struggling to cope with the challenges like semiconductor issues, and supply chain issues.
Recently, the third-party insurance has also increased which made buying vehicles more costly. A hike in rates will also add to the problems of manufacturers and dealers.