Question

What are the drawbacks of informal source of credit?

Answer 1

Answer:

drawbacks of informal source of credit

1) high interest rate

2) lenders can use unfair means to get the money back

3) high amount of borrower spend on giving the money back

Answer 2

The informal source of credit, there is a fear exploition by the local lender, and

in the formal source of credit, the credit has to be paid in a certain time else the think your kept as collectral would be taken by the bank.