The EMI Addiction

85% of Indebted Indians Spend Over 40% of Their Income on Loan Repayments Are You One of Them?

AHL AarthDisha  |  A Financial Awareness Initiative by Arnold Holdings Limited

Ramesh earns ₹35,000 a month. His home loan EMI is ₹12,000. His car loan EMI is ₹7,500. He took a personal loan last year for his daughter’s school fees: ₹4,200 more. His credit card minimum payment: ₹2,800. Total EMI outgo every month: ₹26,500. That leaves ₹8,500 for groceries, electricity, school fees, medical needs, and emergencies for a family of four.

Ramesh is not poor. He earns a decent salary. But he is trapped.

A shocking 2025 survey of 10,000 financially stressed borrowers found that 85% of them were spending more than 40% of their monthly income only on EMI repayments. Many had taken new loans just to manage old EMIs what financial experts call a ‘debt snowball’.

How Did We Get Here? The 5 Triggers of EMI Overload

• Easy loan apps and instant credit created a culture of borrowing without thinking.
• Between 2021 and 2024, personal loans by banks grew 75%. NBFCs’ unsecured loan portfolios grew 130%.
• Social media and aspirational lifestyle pressure pushed people to buy things beyond their means.
• An estimated 15–20 million middle-class Indians earning ₹5–30 lakh per year relied on instant loans in 2024, especially in Tier 2 and Tier 3 cities.
• About one-third of millennials and 40% of Gen Z Indians are estimated to be under unsustainable debt burdens.

The AarthDisha EMI Health Check

Ask yourself these 5 questions RIGHT NOW:

• What percentage of my monthly take-home income goes toward EMIs? (Safe limit: under 40%)
• Do I have an emergency fund equal to at least 3 months of expenses?
• Am I paying only the minimum due on my credit card each month?
• Have I taken any loan in the last 12 months to repay another loan?
• Do I know the exact interest rate on every loan I have?

If you answered YES to questions 4 or 5, or NO to questions 2 and 3, you need to act now.

The AarthDisha Solution: Your 6-Step Debt Detox Plan

STEP 1.  Make a Complete Loan Inventory — Write down every loan: lender name, outstanding balance, monthly EMI, and interest rate. Most people are shocked when they see the full picture.

STEP 2.  Attack High-Interest Debt First — Always prioritise paying extra on the highest-interest loan first (usually personal loans and credit cards at 18–36% per year). This is called the Avalanche Method and it saves the most money.

STEP 3.  Negotiate With Your Bank — Banks and NBFCs often allow EMI restructuring if you ask. You can request a loan tenure extension (lower EMI), a moratorium (pause payments for 2–3 months), or a one-time settlement if you are severely distressed. RBI mandates that all regulated lenders must have a grievance and restructuring framework.

STEP 4.  Stop Taking New Consumer Loans — No new personal loans or credit card debt for 12 months. Use a debit card. Buy only what you can afford with savings. This is hard but non-negotiable.

STEP 5.  Use the 50-30-20 Rule — 50% of your income on needs (food, rent, utilities, EMIs). 30% on wants (entertainment, shopping). 20% on savings and emergency fund. If your EMIs alone are above 40%, work backward cut wants completely until the ratio is healthy.

STEP 6.  Seek a Credit Counsellor — The RBI has established the Credit Counselling Centre programme. Many banks offer free financial counselling. You can also contact Non-profit organisations like SEWA, Rang De, or local NGOs. They will help you create a debt repayment plan without judgment.