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SBI has increased the interest rates, now this is how your EMI will be affected, understand the complete calculation here

Rahul Tiwari | August 16, 2024 5:21 PM CST

The country's largest public sector bank, State Bank of India (SBI), has increased the MCLR rates. MCLR has increased from 8.85% to 8.95%. The new rates have come into effect from August 15, 2024. With the increase in MCLR, taking a loan from the bank will now become expensive. Not only this, now the EMI of home loan, car loan and education loan will also have to be paid more. This will have a direct impact on the pockets of the customers.

Understand the maths here

Suppose, you are going to take a loan of Rs 10,00,000, the tenure of which is 10 years i.e. 120 months and the spread is 1%. We will calculate the EMI in two situations. First at MCLR 8.85% and second at MCLR 8.95%. Then we will see what effect is seen.

MCLR 8.85% (Interest Rate 9.85%)

Spread 1% (Loan spread is the additional interest rate added to the MCLR rate)
Total interest rate- 8.85% + 1% = 9.85%
Monthly interest rate- 9.85% / 12 = 0.008208
On calculating the EMI, the EMI to be paid at MCLR 8.85% will be Rs 13,227.

Interest rate at MCLR 8.95

MCLR- 8.95%
Spread - 1%
Total interest rate- 8.95% + 1% = 9.95%
Monthly interest rate 9.95% / 12 = 0.008292
On calculating the EMI, the EMI amount paid at MCLR 8.85% would be Rs 13,318.

An increase in MCLR from 8.85% to 8.95% will result in a difference of approximately Rs 91 in your EMI. Thus, a 0.10% increase in MCLR affects your EMI, and you will have to pay more each month.

These banks have also increased interest

Before SBI increased its MCLR, many banks have already changed their MCLR and their new rates have also been implemented from this month. If we talk about the banks included in this list, then they include Bank of Baroda, Canara Bank and UCO Bank.