What is a Bank Loan? Explained

What is a bank loan? Explained

Money lending is a one method where banks do generate revenue from in the finance industry out of many other ways. Bank loan is a common revenue generating method that bank uses to balance the supply demand and the cash flow of the bank from the very historic time. There are wide range of money lending products or bank loans that banks do offer to the customers. 

What bank does by giving a bank loan for an individual is, bank is lending some amount of cash to an individual or to a business for some task where that person or the organization need cash by signing a contract. The process of money lending is subjected to an interest rate where the borrowing person or the organization needs to pay for the bank monthly or when making the repayment of the total amount. And the bank loan's repayment time period is limited to a certain period. If you agree upon the bank's terms & conditions which will be applicable to the contract of yours which you will sign with the bank.

There are many types of banks which are there and you can choose from the products that banks offer according to your requirement and the capital requirement of yours. If you are planing to buy a house or buy an apartment you can simply chose a home loan products that banks offer. If you are planing to expand your business, you can apply for a business loan. If you are planing to buy a vehicle, you can apply for an vehicle loan from the bank. If you are planing to do a degree program, you can apply for an education loan from a bank.

Some Banking institutions request for collateral or something equally valuable or more valuable than the borrowing amount from the borrowers to be confident about recovering funds whenever the borrower fails to repay the amount by cash.

There are many products that banks do like to offer you when it comes to money lending. It's your responsibility to choose which is the right product for you and which suites for your requirement.