The Reserve Bank of India (RBI) has recently implemented a 50 basis points (bps) reduction in the policy repo rate, bringing it down to 5.5%. This marks the third consecutive rate cut in 2025, totalling a 100 bps decrease so far. Additionally, the RBI has lowered the Cash Reserve Ratio (CRR) by 100 bps to 3%, aiming to enhance liquidity in the banking system and stimulate economic growth. 

Here’s how the RBI move is likely to impact different loans:

Home loans

Repo-linked home loans will benefit immediately from the 50-bps cut, pushing rates closer to 8%, with top borrowers already accessing rates near 7.85%. "With a cumulative 1% repo rate cut this year, home loan borrowers can expect substantial savings, in some cases more than Rs 6,000 per month, on their EMIs. This will not only ease repayment burdens but also free up disposable income, encouraging greater consumer spending and driving broader economic momentum," said Yashish Dahiya, Chairman & Group CEO of PB Fintech.

However, loans tied to older benchmarks, such as MCLR or base rate, common before 2019, won’t see automatic relief. Borrowers in early repayment and paying above 8.5% should consider switching to repo-linked loans for better savings. 

Car loans

"Car loans linked to market rates like External Benchmark Lending Rate (EBLR) will become more affordable as EMIs decline following the RBI rate cut and improved liquidity. Most borrowers will benefit soon, but those on older benchmarks may face delays. Overall, vehicle financing is set to ease for the majority," said Adhil Shetty, CEO of BankBazaar.com.

Education loans

Education loans, especially newer ones tied to external benchmarks, may benefit from the rate reduction. Still, many existing loans under older pricing systems might not see immediate changes, as banks often take a cautious approach in passing on cuts here.

Business loans 

Business loans show mixed outcomes. "Large corporate loans linked to repo or market benchmarks are likely to get cheaper quickly. Small and medium enterprises might see slower benefits, particularly on unsecured or older loans. However, the RBI’s efforts to boost liquidity and reduce banks’ funding costs should gradually ease borrowing rates across the board," said Shetty.

Personal loans  

Personal loans are unlikely to become significantly cheaper despite the rate cut. "These unsecured loans carry higher risk premiums, so banks usually maintain elevated interest rates. Transmission of policy easing to this segment tends to be slow and limited," Shetty added.