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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 11, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Sep 07, 2025Hindi

I have Multiple Loans from Banks as wells as APP's and Other NBFCs. Also I have a hand loan of 40k pm. I am trying to get out of these loans but unable to do so. Though my monthly salary has increased, I am unable to clear these EMI's, and have started falling behind. Right now I am paying around 90% of my salary for EMI. How can I get out of this situation and clear my Loans. Kindly advise.

Ans: You have bravely shared your financial struggle.
Acknowledging it is a strong first step.
There is always a way forward.

Let us explore a practical and complete way out for you.

» Understand the Root Cause of the Debt Trap

– Your EMIs are eating 90% of your income.
– This is a classic case of a debt spiral.
– More loans are taken to repay old ones.
– Even salary hikes fail to improve the situation.
– This is not a spending issue alone. It is a structure issue.
– And it needs to be tackled both psychologically and financially.

» Stop Borrowing Further, Immediately

– Don’t take even one more loan or credit card swipe.
– Avoid new app loans or top-ups from NBFCs.
– These loans offer short-term relief but worsen your debt.
– Pause all hand loans and personal borrowing.
– Inform your lender friends you can’t continue for now.
– If not stopped now, things will only get worse.

» Create a Complete List of All Loans

– Write down each and every loan you owe.
– Mention lender name, outstanding balance, EMI, and interest rate.
– Include banks, NBFCs, apps, friends, family – all.
– Categorise them as high-interest, medium-interest, and low-interest.
– This becomes your master plan.
– No clarity means no solution.
– This list is your first control over the situation.

» Identify the Most Expensive Loans

– App loans and NBFCs usually have high interest rates.
– Credit cards and payday loans fall under this.
– These should be the top priority for repayment.
– Even small amounts cleared here help improve cash flow.
– Delay low-interest loans for now, if possible.

» Talk to All Lenders – Ask for Restructuring

– Approach each bank or NBFC formally.
– Ask for restructuring, not a top-up.
– Request longer tenure and smaller EMI.
– This reduces the EMI burden immediately.
– Many lenders support this when shown proof of hardship.
– Don’t avoid EMI. Instead, engage with the lender.

» Try a Low-Interest Consolidation Loan

– Check if a single low-interest loan can close many smaller loans.
– This works only if you have a good credit score.
– Banks may offer this if salary is stable.
– The aim is to convert all loans into one EMI.
– Avoid NBFCs or fintech apps for this.
– Take help from your HR to get bank support.

» Negotiate with Hand Loan Lenders

– These loans can’t be ignored.
– But they are not governed by credit scores.
– Request a temporary pause or lower monthly amount.
– Suggest paying Rs. 10,000–15,000 for some time.
– Most personal lenders will support if communicated well.
– Don’t ghost them – explain your plan clearly.

» Set a Monthly Survival Budget

– First step is to protect your essential spending.
– Food, rent, bills, school fees must be safe.
– Fix a survival budget: This is untouchable.
– What’s left is the actual money available for loans.
– This gives real clarity, not just assumptions.
– Any excess money must go only for high-interest loans.

» Start an Emergency Pause for Low-Impact EMI

– If any loans are at low interest or zero penalty, pause them.
– Use moratorium, skip 1–2 EMIs if possible.
– Not for long term, but only short term.
– Use that cash to reduce high-interest loan pressure.
– Restart those EMIs after some recovery.

» Explore Support from Employer

– HR departments often help genuine cases.
– Ask if your employer can give a salary advance.
– Or a loan with 0% interest, payable in 12–18 months.
– This can be used to close at least one expensive loan.
– Don’t feel shy – many companies already support such needs.

» Create a 3-Phase Repayment Plan

– Phase 1: Survive. Stop new loans. Pay essentials. Pause or restructure loans.
– Phase 2: Attack. Use every extra rupee to close expensive loans.
– Phase 3: Recover. Pay back paused loans. Rebuild credit score.

– Write down this strategy.
– It helps to see the path visually.
– Don’t keep it all in your head.

» Increase Income Wherever Possible

– Your salary has increased, which is good.
– Explore freelance, part-time or weekend options.
– Even Rs. 5,000 extra per month helps.
– Use this income only to reduce expensive debt.
– Avoid spending this extra money.
– Small extra income over months makes big difference.

» Start Tracking Every Rupee for 90 Days

– Use an app or diary.
– Record every spending for next 90 days.
– This creates awareness and discipline.
– You will find extra Rs. 500 to Rs. 1,000 per week.
– That small amount can close an app loan soon.
– Debt recovery begins with awareness.

» Do Not Fall for Balance Transfers

– These may look attractive, but they trap you again.
– App loans and NBFCs will give quick approval.
– But this adds more pressure and more EMI.
– Never solve a loan problem by adding another loan.

» Avoid Taking Advice from Unqualified Sources

– Friends may suggest shortcuts.
– YouTube channels may suggest balance transfers or gold loans.
– These may work short term but create long-term damage.
– Always follow structured, professional advice.

» Don’t Consider Selling Insurance or ULIPs (if you have)

– If you have LIC, ULIPs, or endowment policies, check surrender value.
– If surrender value is reasonable, consider closing them.
– Then reinvest the amount into debt funds via CFP through MFD route.
– Insurance and investment must be separate.
– Insurance should not be treated as liquidity for debt.
– But if it helps avoid expensive app loan, do consider.

» Avoid Real Estate or Gold Loan Solutions

– Do not mortgage gold or property.
– Do not think about selling plot or land.
– These solutions are slow and unreliable.
– They also create long-term regrets.
– Stay with practical and manageable steps.

» Rebuild Your Credit Score Slowly

– Once the EMI pressure comes down, rebuild score.
– Pay all EMIs on time, even minimum EMI.
– Don’t close old accounts. Don’t apply for new credit.
– Your credit report will reflect this stability.
– In 12 to 18 months, you will see improvement.

» Work with a Certified Financial Planner

– Once loans are under control, do long-term planning.
– A CFP professional can help structure wealth creation.
– Avoid Direct Mutual Funds for now.
– Direct funds don’t offer regular portfolio monitoring.
– Wrong fund choice can delay financial freedom.
– Instead, invest through MFD with CFP guidance.
– This ensures personalised asset allocation and goal tracking.

» Avoid Index Funds or ETFs for Investments

– Index funds seem low cost but have disadvantages.
– They do not outperform market, only mimic it.
– No downside protection in falling markets.
– Actively managed funds have better risk-adjusted returns.
– Expert fund managers can manage volatility better.
– Better suited for recovery after debt crisis.

» Celebrate Small Victories on the Way

– Paid off an app loan? Celebrate it with family.
– Reduced EMI from Rs. 40,000 to Rs. 25,000? Record it.
– These moments will keep your motivation alive.
– Recovery is slow but steady.
– Each step matters. Each loan cleared is a success.

» Finally

– You have shown strength by asking this.
– You are not alone. Debt issues are more common than we think.
– With the right structure and mindset, it is solvable.
– Avoid shortcuts. Don’t rush.
– Be consistent for 12–18 months.
– From pressure to peace is absolutely possible.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.