In one to two sentences, explain why borrowing costs would be higher with indirect financing versus direct financing.(2 points) one paragraph

Answer 1

Borrowing costs would be higher with indirect financing compared to direct financing due to the additional fees and charges associated with intermediaries or financial institutions involved in the process of indirect financing, resulting in increased costs for the borrower. Additionally, indirect financing often requires meeting stricter eligibility criteria and providing more collateral, which can further raise the borrowing costs.