When is the right time to apply for a Personal Loan?

The condition of an economy is a key factor in the changes that occur in the financial system. They can be short term occurrences or might be long term events. The factors that influence the whole market are known as Macro-economic factors. Macro-economics as field studies and monitors large scale factors, such as GDP, national income, price indices, investment, foreign trade, etc.

Just like any other industry, the credit\loan industry is also affected by these macroeconomic factors. In India, the government plays an active role in the business environment due to the presence of an active public sector. This is also the reason behind the requirement of strong monetary and fiscal policy in our country as compared to a purely capitalistic system. One of the tools of monetary policy is the bank rate. It is the interest rate at which the RBI lends funds money to other domestic banks.The impact is such that a lower bank rate allows the domestic banks to expand their lending. Hence they can further lend out funds at lower rates themselves to the wider public. 

Sometimes in order to reduce the activity in the economy, the government raises the bank rate, which causes a decrease in bank lending, and this causes a rise in the interest rate on loans offered by banks.

Not only economical but other business environment factors also have a pronounced effect on the market scenario. Some are as follows:

• Political environment
• Social environment
• Technological environment
• Legal environment 
• Natural environment
• Demographic environment
• geographic environment
• Cultural environment, etc.

Another important factor is the general change which might in the form of a pattern; this is known as the business cycle the fluctuation, additionally referred to as the economic cycle or fluctuation, are the fluctuations of the gross domestic product (GDP) around its long-run growth trend. The length of a fluctuation is that the amount of your time containing one boom and contraction in sequence. These variations involve movement over time between periods of comparatively fast economic growth (booms) and periods of stagnation or decline (recessions). Business cycles are sometimes measured by considering the expansion rate of real gross domestic product. Despite the often-applied term cycles, these fluctuations in economic activity could or might not exhibit uniform or certain regularity. The common or widespread usage boom-and-bust cycle refers to fluctuations during which the growth is fast and the contraction severe. The current read of thought economic science is that business cycles are primarily the summation of strictly random shocks to the economy and so don't seem to be, in fact, cycles, despite showing to be thus. However, bound unorthodox colleges propose different theories suggesting that cycles knock-off reality exist because of endogenous causes. These business cycles provide us that besides the special reasons, there are certain general influential factors that allow the economy to rise, causing inflation and fall, causing depression.

For example, we can study the difference between the interest rate of the Indian bank personal loan for now and for March 2020. On March 8th 2020, the bank rate was 6.50%, and the bank rate on March 5th 2021, was 4.25%. This showed results in the rate of interest of banks as well. The rate of interest offered by the Indian bank in personal loans was greater than 13.50%, while the rate of interest offered now is 11.05%. 

 Also Read This-Basic Features and Concepts Related to the Functioning of Car Loan