Which of the following is the major reason why people in rural areas borrow money from money lenders despite high interest rates?

Unavailability of collateral

Absence of collateral is one of the major reasons which prevents the poor from getting bank loans. Informal lenders such as moneylenders, on the other hand, know the borrowers personally and hence are often willing to give a loan without collateral. Thus, people in rural areas take loans from the money lender despite the fact that they charge higher interest rates.