There are a few different types of personal loans, and each type works a bit differently. Here's what you need to know about your personal loan borrowing options:
1. Secured Personal Loan
A secured personal loan is a personal loan that's backed by collateral.3 This means you put up valuable personal assets that you own, such as a bank account balance, vehicle, or property, which the lender can liquidate for cash if you're unable to pay the loan back. However, funds in a retirement account, such as a 401(k) or IRA, are usually not accepted.
Since secured loans pose less of a risk to the lender thanks to the collateral, it might be easier to qualify for a larger loan amount or lower interest rate.
2. Unsecured Personal Loan
Most personal loans are unsecured, meaning you don't have to offer any collateral to qualify.4 Instead, the lender examines your financial history, including your credit score, income, outstanding debt, and more when evaluating your application.
3. Personal Line of Credit
A personal line of credit works similarly to a personal loan but it offers a more flexible borrowing arrangement. Rather than receiving your funds in one lump sum, you can borrow against a line of credit and pay it off over a specific term with interest, make at least a minimum payment, pay interest based on your outstanding balance, and possibly pay a fee each time you use the account. 5 A personal line of credit can be helpful if your income fluctuates or you have a sudden unexpected expense.
When is a personal loan the right choice?
Personal loans aren't for everyone. Unlike a credit card, the debt has to be repaid consistently over a relatively short period of time. But also unlike a credit card, the interest rates are often lower, which can make borrowing money much less expensive.
If you'd like more information about how personal loans work, stop by your local Synovus branch to talk with a banker and see if a personal loan is the right choice for your situation.
Interested in a personal loan or line of credit?
Visit your local branch or call us at
1-888-SYNOVUS (1-888-796-6887) to learn more.