Question

why are formal sources of credit preferred over the informal source of credit give three reasons​

Answer 1

Answer:

Disadvantages of informal sources of credit:

1. It charges high rate of interest.

2. Can even do act of vandalism if you are

unable to repay.

3. oftenly, Borrowers fell into debt trap and

lenders also harasses them

Answer 2

Hello Dear ☺

⤵Your answer is Here⤵

Formal sources of credit prefer over informal because final sources comprises of government organizations and collateral security, lower interest rates on its loan like co - operative bank & RBI but informal sources comprises higher interest on its loans does not provide collateral security & no organisation to.✔✔

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Onlystudies98❤

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