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Sometimes we can all use a little extra money.
Especially if you’re trying to make a larger purchase or need to pay for something such as a wedding or a cross-country move! Not everyone has the immediate funds to finance future life events or unexpected emergencies. If that’s the case, a personal loan could come in handy.
There are a lot of choices when it comes to selecting a personal loan, and as you start the process you’ll likely have some questions.
Should you use online lenders or banks, or should you borrow from your family?
Which lender has the best options?
Since it’s your money we’re talking about here, it’s important that we get it right. Let’s start from square one.
There are loans for many different purposes, but in the world of personal loans, there are two basic types: Secured and unsecured loans.
A secured personal loan is money borrowed from a lender, who uses your personal possessions - known as “collateral” in the loan world - as security for the loan.
Here are a few examples of collateral you could put up for a secured personal loan:
Unsecured personal loans, on the other hand, are a little different. Unlike their secured counterpart, unsecured personal loans are typically granted on the basis of factors such as creditworthiness and ability to pay, and (importantly) they don’t require you to put up any of your things as collateral to secure the loan.
Unsecured personal loans could be a great option if you don’t want to risk losing personal possessions, such as your car or your home.
Certain lenders may be flexible about how you use the loan.
As we discussed earlier, there are a variety of different loan types you can choose from. First, decide whether you’ll go with a secured or unsecured loan. From there, consider the various types of personal loans and what best fits your needs.
Certain lenders may be flexible about how you use the loan, while others may only let you use the borrowed funds for specific purposes, so knowing what you intend to do with the personal loan can be helpful when choosing which option is best for you.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.