A monthly salary of Rs 75,000 may sound enough to stay financially stable, but a borrower has shared how he got pulled into a debt trap despite his decent income. In a Reddit post, the man shared how a payday loan of just Rs 12,000 ended up costing him significantly.
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Payday loan is a short-term unsecured loan that often comes with high interest rates. While it is easy to secure such loans at short notice, many added costs and interest can add significant financial burden on the borrower over time.
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As per the Reddit post, the borrower highlighted that he took a Rs 12,000 loan and ended up paying more than Rs 14,000 in just 18 days.
Here is how the loan worked:
- Loan approved: Rs 12,000
- Processing fee: Rs 1,416
- Amount received: Rs 10,584
- Total repayment: Rs 14,160
- Repayment period: Just 18 days
In simple terms, the borrower received only Rs 10,584 of the Rs 12,000 approved loan but had to repay Rs 14,160 within 18 days. That means Rs 3,576 went towards borrowing costs.
“And what surprised me even more was what happened after repayment. Instead of simply closing the relationship, I started receiving promotional emails encouraging me to take another loan. I hadn't even applied, yet they were actively trying to bring me back as a repeat borrower. This made me realise how easily someone can get trapped in a borrowing cycle…,” the user shared.
He noted that despite his decent income, he fell into such a trap without even realising its long-term implications.
“Imagine someone earning Rs 50,000 to Rs 70,000 a month. They take an instant loan to manage household expenses, groceries or an emergency. When salary arrives, a significant portion goes towards repayment. Then they're short of money again and another loan starts looking like an easy solution. Eventually, they're working every month just to repay previous borrowing. The most dangerous part is that borrowing starts feeling normal,” he posted.
Noting that while every loan platform may not be fraudulent, the user warned others to stay clear of such apps as much as possible.
“I'm 31, earn a decent salary and still fell into this cycle because of poor financial decisions and my own mistakes with options trading. I've repaid my loans, deleted the apps and decided to stay away from F&O trading. I'm now trying to rebuild my financial life with better habits and discipline,” he added.
The user also added that while there is no shame in facing financial difficulties, borrowing money to escape previous borrowing can make this much worse.
“Your salary should help you build your future, support your family and create financial security. It shouldn't disappear every month into expensive loan repayments,” the post concluded.
Reacting to the post, other users agreed about avoiding borrowing through “shady” loan apps. Some suggested that if the borrowing is needed for under a month, it may be better to use a credit card instead.
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