Unit 4 Ch 3 : Money and Credit — Social Studies STD 10 — Question

Every loan agreement specifies an interest rate which the borrower must pay to the lender along with the repayment of the principal.
In addition, lenders may demand a collateral or an asset that the borrower owns to use it as a guarantee until he repays the loan.
Interest rate, collateral and documentation requirement and the mode of repayment are the terms of credit required for formal or informal sectors for loans.