Cut a 10-by-16-inch rectangle of terry cloth. Cut the corners of the cloth with a slight curve so it will be easier to pin the bias tape around them. Cut a 65-inch length of double fold bias tape.
Fold the cloth in half widthwise, so that the 10-inch sides are together. Place the towel on a table with the fold on top. Place a blue-headed pin 1 inch below the fold on both sides. Pin only through the top layer of fabric. Mark the location of the fold on the sides with two yellow-headed pins. Unfold the cloth.
Starting at the blue pin on the right side and going toward yellow pin on the same side of the fold, wrap the bias tape all the way around the perimeter of the terry cloth. Pin the tape in place with pins that are not blue or yellow. When you return to the first end, overlap the tape so that you have two layers of tape around the edges between the blue and the yellow pin. Do not cut off the remaining length of tape. It will be attached at the other side to form the loop.
Bring the tape loosely across the towel to the yellow pin on the left side and pin it in place at this point. Do not pin down the tape between the yellow pins.
Wrap the tape over the edge between the yellow and blue pins on the left side of the towel. You will have two layers of tape over the edges between both sets of blue and yellow pins. This overlap insures the tape is attached to the towel well so that it will not pull off when you hang the towel on the stove. Fold under 1/2 inch at the end of the tape to create a finished end. Pin this end in place.
Set the machine to sew a straight stitch with a standard stitch length. Sew 1/8 inch from the inside fold all the way around the towel, removing the pins as you go. Be sure to catch both edges of the tape in the seam.
Sew together the folded edges of the band of tape that goes across the towel. Stitch 1/8 inch from the folds of the bias tape. Get as close to the towel on each side as you can.
Fold the towel in half widthwise with the loop of bias tape on the outside. Lay the towel on the table with the fold on the top. Fold the sides of the towel in to the center so the ends of the bias tape band come together and the band becomes a loop. Fold the tape loop over the stove handle and pull the bottom edge of the towel through it.