EMIs rising faster than your salary? Feeling the pressure every month and unsure where you went wrong? Most debt traps begin silently—with one bad EMI decision. But is there a rule that keeps you safe? Experts say yes, and this single salary-EMI formula can change everything.

Today, many people take loans without checking how much EMI they can actually handle. One small mistake can later become a big money problem. That’s why experts say everyone should follow this simple salary-EMI rule before taking any loan.

In an interview with Zee business, Mutual fund expert, Vishwajeet Parashar shared that most borrowers fall into trouble simply because they don’t track their EMI-to-salary ratio.

He added a clear limit can protect people from stress, late payments and high-interest debt traps.

How to escape a loan trap?

According to Parashar, there are multiple ways to come out of a loan trap—but the first step is awareness and verification.

Check whether your loan is from a regulated app or lender.

• If you are stuck, the very first thing to verify is whether the loan was taken from an RBI-regulated platform.
• Unregulated apps create bigger problems, including harassment and misuse of personal data.

In case of threats, you can:

• File a police complaint.
• Apply for help under the Consumer Protection Act, 2019.
• Refer to RBI’s Fair Practices Code and read digital lending guidelines carefully.
• Keep detailed records, lender information, and app info wherever you get the funds from.

Keep full documentation of your loan.

• Wherever you borrow from, maintain complete records, lender details and app information.
• Reading the guidelines thoroughly helps you respond confidently in case of any dispute.

Negotiate with your lender.

• One-Time Settlement (OTS)
• Moratorium, if you have taken the loan from a legitimate lender
• In some cases, repayment can be paused or restructured.

Use smart strategies to reduce high-interest debt

• If you already have a home loan, you can consider taking a Loan Against Property (LAP) at a lower interest rate to repay extremely high-interest loans.
• Better management of your loan portfolio and financial planning can prevent you from falling into traps again.

• Borrow only what you can repay.
• Understand the RBI’s Fair Practices Code and Digital Lending Guidelines.
• Understand that transparency and non-coercive recovery are mandatory for lenders.
• The Supreme Court has clearly stated that using goons or physical intimidation for recovery is illegal.
• Under the Usurious Loans Act, 1918, you can challenge extremely high interest rates.
• Under the SARFAESI Act, you have the right to respond to notices on secured loans.
• Improve your financial literacy to avoid future traps.
• Keep your EMIs within 40 per cent of your income for safe and stable finances.