What is a bank loan?

Does anybody know what a bank loan is?

• It's for my economics class. PLEASE HELP

• Answer:

  A bank loan is usually for mortgages, automobiles and businesses. These are generally loans for a specific purpose that is of a fixed amount for a fixed period of time for a fixed amount of interest to be paid back at a fixed amount each month until the debt is paid in full. These are called closed end loans. Another type of bank loan is a Line of Credit loan. You are given up to a maximum amount you are allowed to spend. The payments are based upon how much you use - similar to a credit card. But the interest is fixed and so is the payoff period. These are similar to a credit card, but the loan is for a specific purpose (like home improvement or business expansion). Then there are credit cards which is an open ended loan of an unspecified amount of money (up to a credit limit) for an unspecified amount of time for an unspecified amount of interest..