Question

The situation where farmers face loss due to crop failure and become unable to pay loans, is known as _______.

• A. loan trap
• B. debt loan
• C. loan debt
• D. debt trap

Answer 1

The correct option is D debt trap

Debt trap is the situation when a person takes a loan, and is later unable to pay the loan with its interest. The interest increases with every passing month. It can also lead to a mental breakdown and huge physical loss in the form of homes, jewellry, and the like since these will have to sold to repay the loan.