60% of borrowers have EMIs eating up family income. Is festive debt worth it?

A new phone for Diwali, a holiday with family or gifts for loved ones can make the festive season special. But when savings fall short, many people turn to loans or credit cards to pay for these expenses. The monthly instalment may seem small enough to manage, but the real cost can become clear only when the bills start adding up.According to data shared by Expert Panel, a debt and loan resolution platform, around 60% of borrowers have EMIs that either exceed or nearly equal their total monthly family income. What is more concerning is that 40% are taking fresh loans or using credit cards to manage existing EMIs.For households already struggling to balance their budgets, another festive-season loan could add to the pressure instead of making the celebrations more enjoyable.WHY ARE PEOPLE BORROWING MONEY?Not every loan is taken to fund shopping or a holiday. For many families, borrowing is a way to deal with emergencies or meet expenses they cannot avoid. According to the data, medical emergencies and health issues accounted for 26% of borrowing cases, making them the most commonly cited reason. Another 22% of borrowers took loans for family or personal expenses, including weddings and education. Business needs or job-loss-related requirements accounted for 18%, while household and daily expenses made up another 15%.These figures suggest that many people are already borrowing to meet essential needs. Adding festive spending to an existing list of financial commitments can make it harder to keep up with repayments. The problem becomes more serious when a borrower's income falls or an unexpected expense arises. The data shows that job loss or salary cuts accounted for 31% of cases where borrowers struggled to repay loans. A high EMI burden compared with income was cited in 28% of cases, while multiple loans or excessive borrowing accounted for 19%. Medical or family emergencies contributed to another 12%.WHEN ONE LOAN LEADS TO ANOTHERA new loan may look affordable when considered on its own. However, the calculation changes when personal loans, credit card dues and other monthly instalments are added to the household budget.The data also revealed that 40% of borrowers were using new loans or credit cards to manage existing EMIs. This means some borrowers are relying on fresh credit to keep up with repayments on money they have already borrowed.Over time, this can become a difficult cycle to break. A new loan may help cover an immediate expense, but it also adds another repayment to future budgets.Anurag Mehra, Director at Expert Panel, said festive spending is often driven by emotions, social expectations and the desire to make celebrations special. However, borrowing for these expenses can turn a one-time purchase into a long-term financial commitment."Our data shows that a significant proportion of borrowers are already struggling with EMIs that consume most of their household income, while many are using fresh credit to manage existing obligations," Mehra said.He advised consumers to consider their existing EMIs, the total cost of borrowing and their repayment capacity before taking a festive-season loan.IS ANOTHER FESTIVE-SEASON LOAN WORTH IT?Festive sales, discounts and easy access to credit can make it tempting to buy now and pay later. But a purchase that feels affordable today can put pressure on the household budget for months to come.Mehra said a loan should meet a genuine financial need rather than create another obligation that becomes difficult to manage after the celebrations are over.Before applying for a loan, borrowers should calculate their total existing EMIs, credit card dues and other short-term liabilities. They should also check the total interest payable and ensure that their income can cover the additional instalment, even if an unexpected expense arises.It is equally important to distinguish between essential spending and purchases that can wait. If an expense is not urgent and borrowing would leave little money for household needs, postponing the purchase may be the safer choice.As the report mnetioned, with 60% of borrowers already facing EMIs that exceed or nearly equal their monthly family income, taking on more debt without checking repayment capacity could worsen their financial stress.The festive season may last a few weeks, but loan repayments can continue long after the celebrations end. Before taking another loan, borrowers need to ask themselves a simple question: will the purchase bring lasting value, or will the EMI become a burden once the festivities are over?- Ends