The factors that affect the interest rate charged on agricultural credit.

• Government policy: The central bank of a country controls the money supply and the base rate of interest through its monetary policy.
• Economic strength: A strong economy tends to have higher interest rates to control inflation and attract foreign investment.
• Inflation: A high inflation rate reduces the purchasing power of a currency and increases the cost of borrowing.
• Supply and demand: The availability and demand of agricultural credit in the market influences the interest rates.
• Credit risk: The risk of default by the borrower affects the interest rate charged by the lender.
• Government subsidies
• Size of a loan big loans attract smaller interest
• Duration of loan repayment
• Previous loan repayment history: good repayment history attracts lower rates

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Dr. Bbosa Science