5 signs of a debt trap, you must watch for

1. Borrowers take high-interest loans to cover outstanding debts.

2. New loans are used to pay off old ones, creating a cycle of borrowing.

3. Total debt keeps increasing due to increasing interest amount and penalties.

4. Most of the borrower’s income goes toward debt repayment, reducing financial freedom.

5. Borrowers are left with few options to raise funds and are often vulnerable to predatory lenders.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.