Bangalore: The decision of various banks to slash Basis Points (BPs) by 25 is seen as a welcome step by most people; report Nandini Sen Gupta and Aparna Ramalingam of the Times News Network. The rate cut has different effects on EMIs (Equated Monthly Installments) of personal, home and car loans.

Personal loans will have a monthly saving on EMI of around only 50-100 for a loan amount of 3-4 lakh, which will be spread over 3 years. EMIs for home loans will fall by 17 for every 1 lakh worth of loan for a period of 20 years. EMI in car loans will witness a dip of around 100 for 4 lakh worth of loan, spread over 3 years.

Majority of home loan seekers might not even notice this change as most loan providers will lengthen the loan period than reduce the EMIs. The rate cut might also not benefit those who have taken a loan in the past 3 years. This is so because such customers have a locked teaser rate, where the rates are set for the early years but increase when the tenure is over.