Question

Explain the problems faced by borrowers of loans form the informal sector? answer fast please

Answer 1

Answer:

The problems faced by the borrower Of loan from the informal sector as under:

1. They are charged heavy interests thus trapping them in heavy debts.

2. The informal sector is unauthorised hence there is much exploitation of borrowers.

3. The borrowers are sometimes forced to sell their lands at cheaper rates to pay their debts.

Answer 2

Most of the informal lenders charge a much higher interest on loans. Thus the cost to the borrower of the informal loans is much higher. ii Higher cost of borrowing means a larger part of earning of the borrowers is used to repay the loan and they have less income left for themselves.