Bank Loans

Bank loans can give you the capital you need to buy a house or a car, or refinance that high-interest debt into one manageable loan.

bank loanBank loans can meet many borrowers’ financial needs, including paying tuition, buying a house, getting a new car and more. You may often need money to buy an essential item or make life more manageable, so keep yourself up to date on how bank loans work.

Bank loans make it possible for businesses to purchase inventory and equipment too. Businesses can also take advantage of the added operating capital they provide for expansion.

There are, however, certain strict terms you must meet before a bank approves you for a loan. For a business to get a loan, it must be established and profitable. For an individual to qualify, though, they must have favorable credit and enough income to cover the payment.

Borrower’s Obligations

For a business, it must first prove its need for the loan and that it can afford to repay the loan. In some cases, the bank may also require an updated business plan prior to approval. Though the bank is technically investing in the business, it generally does not take ownership stock in the business.

As an individual borrower, you must prove you can afford the loan through their employment income or retirement savings. You may also have to put up collateral for the loan if it is a large amount.

Bank Loan Terms

Banks generally offer flexible repayment terms on their loans with repayment periods ranging from one to more than 10 years. This flexibility and longer terms make them better options than payday or cash advance loans.

Interest rates on bank loans are generally low than credit cards, so they are often better choice for large purchases.

Bank Loans Terms

Banks offer a wide array of terms for their loans, including:

  • Fixed rate.
  • Variable rate.
  • Partially fixed rate.
  • Introductory rate.

A fixed interest rate remains the same throughout the repayment period. Repayments are generally simpler to track in this type of loan, as they do not vary and you can easily track your budget. The downside is that fixed-rate loans often start with a higher interest rate than variable-rate loans

A variable inters rate will go up or down depending on the changes in the market. If the rate goes up, your monthly payment rises too. If it goes down, your payments will decrease. While that instability can be unnerving, the starting interest rate is generally significantly lower than on a fixed-rate loan.

A partially fixed rate loan means one part of the loan is fixed and the other part is a variable. It is sometimes referred to as a split loan.

Some lenders will offer an introductory rate to borrowers. This gives you a low interest rate up front that allows you to settle into the loan and make a good impact on the principal in the first year or two.

Payday Loans Alternatives to Bank Loans

Payday loans offer quick financial solutions for borrowers with bad credit. These are generally borrowers who banks would reject outright or require heavy collateral before issuing a loan to.

However, online payday lenders welcome such clients. If you cannot qualify for a standard bank loan, these are your saving grace.

Use the loan comparison tool at to compare 57 lenders for your cash advances.

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