SBI: As of Monday, November 15, the State Bank of India (SBI) has raised its Marginal Cost of Lending Rate (MCLR) across tenors by 10-15 basis points. Borrowers whose loans are connected to the MCLR will now have to pay higher EMIs.
The MCLR for one month and three months has been raised from 7.60% to 7.75%; the MCLR for six months and one year has been raised from 7.90% to 8.05%; the MCLR for three years has been raised from 8.15% to 8.25%; and the MCLR for three years has been raised from 8.25% to 8.35%.
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Know about MCLR
The least rate at which banks can provide consumers loans is known as the marginal cost of lending rate. The Reserve Bank of India (RBI) introduced it in 2016 to set interest rates for various sorts of loans.
According to Pramod Kathuria, founder and CEO of Easiloan, “The MCLR is the benchmark rate of interest followed by banks for lending. This essentially makes it the minimum rate of interest that a bank can lend at, without lowering the rates any further.”
Any change in the MCLR will have a direct effect on how much loans will cost because as interest rates rise, borrowers will be required to make larger monthly payments.
Existing borrowers may see a delay in their personal loan reset date as a result of this increase, and new borrowers who have loans linked to the MCLR will have to pay higher EMIs.
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Bajaj Finserv suggests the following two methods for lessening the effect of MCLR rates on EMIs:
- to extend the loan term in order to lower the EMIs
- Prepay a portion of the balance to reduce your EMIs.
Additionally, according to Bajaj Finserv, if you obtained your loan after April 1, 2016, it will be automatically linked to the MCLR mode. You can always move to the MCLR mode if your loan was obtained before this date and is related to the base rate regime.
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