A loan can improve a person's quality of life in many ways, such as starting a business, paying for school or renovating a home. Many people consider bank loans because they offer some of the best terms and interest rates available.

Identification

A bank loan means borrowing money from a banking institution, according to Princeton's WordNetWeb. A typical bank loan has a fixed repayment schedule and charges a percentage of the loan amount, called interest, as a fee.

Considerations

Bank loans are some of the hardest to get. They usually require more than just filling out an application because banks want to lend money only to reputable people who are unlikely to use the money frivolously, according to Business Finance.

Getting a Bank Loan

Having a good credit score is crucial, according to Business Town. In addition, you must be of sound character (no criminal convictions) and have some assets to use as leverage against the loan.

Types

Bank loans can be for commercial or private purposes, according to Business Town. Bank loans for businesses are much harder to get, unless the business already makes a profit and has established roots.

Tips

Loan.com recommends that anyone considering a bank loan should correct any poor marks on his or her credit history. In addition, search for cheaper interest rates--an extra 1 percent might not seem like much, but it can add up to quite a bit when dealing with thousands of dollars.

Source:

Princeton; WordNetWeb "Bank Loan"

Business Finance; Bank Loan

Business Town; Getting a Bank Loan

Resource:

Loan.com; Tips for Getting Great Bank Personal Loan Interest Rates