It is not a good idea to encourage individuals to take a loan. However, if you are compelled to take a loan, this is perhaps the best time of the year to do so.

Firstly, the festive season offer on loans is currently on. India's largest lender, State Bank of India has unveiled a slew of offerings. It has waived off processing charges on home loans, which is zero until the festive season.

The other reason is that this festive season, you are getting interest rates on loans that are comparitively cheaper, because all of the banks have reduced their lending rates since last year. In some cases the drop is 75 basis points or 0.75 per cent, in comparison to the same time last year.

Almost all of the banks have reduced their lending rates recently. These include State Bank of India, HDFC Bank, ICICI Bank, Bank of Baroda, Canara Bank, Punjab National Bank, Syndicate Bank etc. In fact, almost all of the banks have cut rates, since the Reserve Bank of India cut repo rates by 50 basis points on Sept 29.

Those taking loan, often ask the question: Would interest rates comes down any further. The answer is at least not immediately in the next three months or so. The RBI has already cut repo rates by 1.25 per cent this year and any further fall at least until early next year is ruled out.

So, it is perhaps the best time of the year to take a loan.

GoodReturns.in