A bank loan works as follows:
- The bank determines how much money to loan you and what annual percentage rate you qualify for.
- The bank reviews your credit score, credit history, debt, and income.
- You apply for a loan.
- You get the loan and pay it back in monthly installments.
Bank loans can be used for:
- Bank loans are normally provided at a cost, which is generally interest on the owed amount. Other fees and charges may be applicable, depending on the type of loan and on the lender.
- Growth
- Instances where the amount of money needed is not going to change
- Loan servicing is the process of ensuring that loan payments are collected from borrowers. Loan servicing includes:
- Meeting emergencies
- Paying for assets, such as vehicles and computers
- Start-up capital