Why are high interest rates on loans harmful?

High interest rates mean high instalments

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High interest rates mean high profit for banks

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High interest rates mean encouragement for banks

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High interest rates mean costilier loans

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Solution

The correct option is D High interest rates mean costilier loans
Interest rates are the main components of a loan and hence, they make loans costlier. If the cost of borrowing is high, the loan repayment instalment also becomes high.

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Similar questions

Rate of interest on loans - Rate of interest on deposits is called ___ .

Statement: An advertisement by Bank X ‘Our interest rates for education loans are lower than any other bank’.

Assumptions:

I. Some other banks also provide education loans.

II. Interest rates charged on education loans are different for different banks.

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