how are high interest rates on loans harmful
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Answered by
9
High Interest on loans forces the borrower to pay large amount of money as additional amount other than the principal amount.
If the lender is a formal financial institution like bank then thus extra money becomes the profit of the bank and is used to extend loan to other needy ones.
But the lender is any informal like The Moneylenders in Rural areas then it becomes difficult to pay back wholly and the borrower has to mortgage his or her property to the moneylenders.
If the lender is a formal financial institution like bank then thus extra money becomes the profit of the bank and is used to extend loan to other needy ones.
But the lender is any informal like The Moneylenders in Rural areas then it becomes difficult to pay back wholly and the borrower has to mortgage his or her property to the moneylenders.
Answered by
7
High interest rates r harmful coz
1.) it is imposed on poor people on their loans and they have have to pay it as an additional amount.
2.) Sometimes these people pay the actual amount but if they r not able to pay the interest, then it starts increasing day by day.
3.) This interest keeps on increasing and if these people don't pay it for a long time then they may have to work as a bonded labour for their money lenders.
How it helps : )
1.) it is imposed on poor people on their loans and they have have to pay it as an additional amount.
2.) Sometimes these people pay the actual amount but if they r not able to pay the interest, then it starts increasing day by day.
3.) This interest keeps on increasing and if these people don't pay it for a long time then they may have to work as a bonded labour for their money lenders.
How it helps : )
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