Solution:
Over the years his debt will Increase – because of increasing interest and non–payment of the monthly amount.Because credit is an arrangement whereby the lender grants the borrower access to funds, goods, or services in exchange for a promise to make future payments. Most informal lenders charge substantially greater interest rates on loans than do professional lenders. Therefore, the cost of informal loans is significantly higher for the borrower. Higher borrowing costs include using a higher portion of the borrowers' income to pay back the loan. In some circumstances, a high-interest rate on a loan might result in a repayment obligation that exceeds the borrower's income. This can result in debt traps and rising debt levels.
