Question

please answer !! this question ​

Answer 1

A credit is subject to certain condition that the borrower that the borrower must agree in. some credits are based on Collateral security but only in formal sources of credit. when sometime if a person fails to pay the required amount of credit in formal or informal sources of credit, then this will lead to death trapin informal sources of credit or loss of collateral security informal sources of credit. when that same person take credit another time then there will be high risk for him. in this situation the rate of interest can be high that the real interest rate.So, in situation with high risk credit might create problem for borrower.