Rate Hike EMI Impact Calculator

About the Rate Hike EMI Impact Calculator

When the RBI changes the repo rate, a floating-rate loan linked to it usually changes at its next reset date. Your bank then either raises your EMI or keeps the EMI the same and extends your tenure. Many banks extend the tenure by default. That keeps the monthly payment the same, but you can end up paying a lot more interest over the life of the loan. This calculator shows both options side by side, so you can pick one deliberately instead of accepting the default.

Enter your outstanding balance, current interest rate, remaining tenure and the rate change in basis points (100 bps = 1%). A 25 bps repo hike usually raises a repo-linked loan's rate by 25 bps. The calculator uses the standard reducing-balance EMI formula. For the same-EMI option, it works out the new number of months needed to close the loan. If the higher rate pushes the monthly interest above your EMI, it warns you that the loan would never close at that EMI.

If a hike leaves your rate well above what lenders now offer new borrowers, a balance transfer may be cheaper than either option. Compare it with the balance transfer savings calculator, and remember to include the processing fee.

How to use it

• Check your loan's benchmark (repo-linked, MCLR or base rate) and reset date in your sanction letter or loan statement.
• If you can afford it, choosing a higher EMI usually saves far more interest than a longer tenure.
• MCLR-linked loans only change at the reset date, and MCLR doesn't always move with the repo rate.
• Results are estimates. Your bank's actual reset may differ because of spread changes or the exact reset timing.