The good news about personal loans is that the Repo rate has made personal loans more affordable. The rates have been slashed by RBI, thereby the banks and non-banking financial institutions can no longer charge higher rates of interest on the instant personal loan online. This has helped many individuals come forward to take a personal loan as that is affordable and very helpful in meeting all kinds of expenses. This has been a great initiative and has helped many individuals do a personal loan apply at a low rate of interest by keeping the charges minimal. It is important for the borrowers to claim a low rate of interest if the banks have not changed the rate of interest after the repo rate has been slashed. If you find a bank in an institution charging the same rate of interest, it is important that you complain or take the required step.
What is a repo rate?
Repo Rate is the rate at which RBI Offers money to financial institutions across the country. NBFCs need to borrow money from RBI in order to ensure smooth cash flow and the proper functioning of their organization. However, RBI tends to increase the repo rate to discourage lenders from borrowing money, which has the tendency to disrupt the country’s economy.
Why does the rate of interest go down with a decrease in repo rates?
The banks and non-banking financial institutions need to submit a certain amount or portion from the amount that a borrower deposits, with the RBI. For example, if you are taking a loan from a particular loan provider and you start the repayment process. The loan provider has to submit a portion of the amount with RBI first this is known as the cash reserve ratio. Now, when the repo rates are slashed down the cash reserve ratio is also down.
This means the non-banking financial institutions do not submit a huge amount of money with RBI anymore. This is the reason why the non-banking financial institutions and banks decrease the rate of interest from the borrowers. And the rate of interest decreases with the decrease in the repo rates, the personal loan becomes very affordable for the borrower. Therefore it is essential for personal loan borrowers to claim a lower rate of personal loan interest rate due to the slashed repo rate.
Wrapping up
If you find that the banks are still charging a higher rate of personal loan interest rate even after the rates have been slashed, you need to report and complain. When you start your personal loan apply process make sure you confirm the rate of interest. To get an instant personal loan online in Mumbai make sure you meet all the eligibility criteria.
No comments:
Post a Comment