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5 reasons why people BORROW money

Last updated on: June 26, 2013 16:45 IST

5 reasons why people BORROW money

P V Subramanyam

There is no research in India done on topics like why people borrow, or how people invest. Here is an attempt at guessing.

1. People borrow to buy assets

Buying a car, a motorcycle, a house etc. requires sums of money that a person may not have, so borrowing becomes a must.

2. To pay for losses made

In equity markets, commodity markets, real estate, or wherever.

People borrow to trade, and when they make losses they need to borrow money to repay the losses.

3. To pay off a pressing loan

If the lender is a mafia don you might as well borrow from the bank and replace the goon.

4. To pay for medical expenses

An emergency normally happens in case of medical needs. This could be a big expense and totally unexpected.

5. Living beyond one's means

For whatever reasons people live beyond their means! So many people earning well (and knowing that they are lucky to be earning that amount) buy latest gadgets, cars, take vacations, their family believes that they can travel only by taxi and air.

When they borrow it is for living beyond their means.

Can this be avoided?

Of course 2, 3, 4 and 5 have to be avoided and can be avoided. How?

2If you do not know how to trade, do not trade. Understand that it is not easy, but people do fall for such trading calls, till they lose their money. Some times all the money.

3. If you have a loan see how did the loan arise and then solve that problem... whatever it is.

4. Take medical insurance, adequately.

Reader Invite: How I repaid my debt

As mentioned in this article, people do borrow money for various reasons. While some manage to repay their debt, some get trapped in a vicious cycle.

If you belong to the category of those who managed to get out of debt quickly we would like to publish your story on Your story could help inspire others to wriggle out of their own debts.

Email your story to (Subject line: 'How I repaid my debt') and we will publish the best, most interesting ones right here!


Photographs: Rediff Archives