Gen Z’s Silent Debt Bomb: 30K Salary, 30 Lakh Loans?

Everyone young feels the pressure to maintain an image, buy what everyone else has, avoid FOMO, and make sure they are not excluded from their social circles. In this race to fit in, Gen Z has been taking loans to create a certain lifestyle. However, little do they realise that the life they are trying to build through borrowed money is slowly pulling them into a deadly quicksand of debt they may not be able to escape.

Currently, Indian Gen Z is facing a debt crisis they don’t even fully recognise, and in a few years, they may have to deal with its brutal repercussions.

With salaries of 30,000–40,000 per month, many young individuals are racking up 30–40 lakh in debt, becoming some of India’s youngest borrowers living on the edge.

For Gen Z, social media and peer pressure fuel the need to buy and flaunt branded products, along with aspirational expenses that their incomes simply cannot support. Combined with a casual attitude towards money and spending habits, and the easy availability of instant digital loans without collateral or paperwork, this generation finds itself caught in a trap that is difficult to escape.

Easy loans from fintech companies and digital lenders have made it simpler for youngsters to live on credit and fall into an unending cycle of debt. Credit card “hacks,” Buy Now, Pay Later (BNPL) schemes, and borrowing more than necessary have made slipping into a debt trap alarmingly easy. The consequences, however, are severe.

Before they realise it, these young individuals, trying to create and establish a certain lifestyle, are already burdened with debt that may take years to repay.

Warning signs include missing loan EMIs, taking out one loan to repay another, maintaining multiple loan accounts with repeat borrowing, having a debt-to-income ratio above 50%, an 80–90% credit card utilisation ratio, paying only the minimum due on credit cards, borrowing for basic needs, and a fixed obligation-to-income ratio higher than 70%. These are clear indicators that a person is inching closer to a dangerous financial trap.

Taking out loans to sustain an unsustainable lifestyle is pushing Gen Z deeper into this cycle, and the sooner they recognise and rectify their financial behaviour, the better it will be for their future.