Team Blitz India
NEW DELHI: Interest rates on certain retail loans like auto and personal loans have begun to rise as several banks revise their marginal cost of lending rates (MCLR). This is despitethe RBI keeping its repo rate unchanged since February 2023.
For customers whose home loans are linked to the repo rate, there has been a change in their home loan EMIs. But other loans such as auto loans and personal loan lack such a connection with RBI repo rate. MCLR is the minimum interest rate a financial institution needs to charge for a specific loan. It dictates the lower limit of the interest rate for a loan.
SBI, initially offering auto loans at 8.65% until December, has now increased the starting rate to 8.85% for clients with high credit scores. Numerous banks have also raised their personal loan rates.
Bank of Baroda, previously charging 8.7% on auto loans, now charges 8.8% and has reintroduced processing fees that were waived during festive months.Union Bank of India has similarly increased rates on auto loans and certain personal loans by adjusting the spread over the external benchmark, resulting in car loans starting at 9.15%, up from 8.75%.