Mr.Y needs a loan for buying fertilisers to enhance crop production.He borrows loan from a bank as it is
i)Cheap and affordable since rate of interest is lower
ii)free from falling into a debt trap
iii) going to ask him to sell his property
iv) free of interest
CBSE Sample paper 2023-24
NCERT Class 10 Social Science
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Mr. Y opts for a loan from a bank primarily due to two reasons:
i) Cheap and affordable since the rate of interest is lower: Banks usually offer loans at a lower interest rate compared to other informal sources of credit, making it a cost-effective option for borrowing funds. This affordability reduces the financial burden on the borrower.
ii) Free from falling into a debt trap: Bank loans often come with structured repayment plans and regulated interest rates, reducing the risk of falling into a debt trap. Structured repayments ensure that the borrower can manage the loan without facing overwhelming financial stress, thereby avoiding a debt trap.