Borrowing

With a loan or line of credit from Santander Bank, you can be prepared for life's expenses, whenever they happen. Whether you're looking to consolidate higher interest rate debt, renovate your kitchen, or cover an unexpected repair, Santander Bank offers plenty of borrowing options that could fit the bill.

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Choose Between Different Types of Loans and Lines of Credit

Sure, you have several options for borrowing money, but which one's right for you? Make a smart financial decision by learning the difference between a line of credit and a loan, and determine which one best meets your goals and preferences.

What's the Difference Between a Line of Credit and a Loan?

Both lines of credit and loans make it possible for you to get the funds you need – whether it’s for major projects or purchases, life events or to consolidate debt.

Types of Loans or Lines of Credit

Determining the best option for borrowing money can feel like a daunting task. That’s why we’re here to help you choose the option that’s right for you. We want you to make smart financial decisions by learning the difference between a line of credit and a loan, and determine which one best meets your goals and preferences.


What is the Difference Between a Line of Credit and a Loan?


Both lines of credit and loans make it possible for you to get the funds you need – whether it’s for major projects or purchases, life events or to consolidate debt.

What is a Line of Credit?

A line of credit is a predetermined amount of money that a financial institution has agreed to lend you with the understanding that you will pay interest on the amount you borrow. Flexibility is a key feature of a Line of Credit that allows you to access funds when you need them, as you need them, up to your available credit limit. That's why a line of credit is a great choice for unexpected expenses or ongoing projects.

A line of credit typically has a Draw Period and a Repayment Period. During the Draw Period, the borrower is responsible for monthly payments based on the amount borrowed and has access to use the line of credit. During the Repayment Period, access to funds ends and outstanding balances are paid back in monthly installments as per your agreement terms.

  • Interest is charged only on the amount you use.
  • Reuse your line as you repay it.

Learn more about line of credit options from Santander.

What is a Loan?

A loan is a preset amount of money given to another party in exchange for future repayment of the total value of loan, plus interest and/or other finance charges. Predictability is a key feature of a Loan. When you know exactly how much you need to finance, you can borrow a specific amount of money for your project or purchase.

  • Borrow a one–time lump sum*.
  • Enjoy a fixed interest rate and predictable monthly payment.

Learn more about loan options from Santander.

Types of Loans or Lines of Credit

What is the difference between a secured and an unsecured loan or line of credit? Here's a straightforward explanation of your options for borrowing money.

What is a Secured Loan?

A secured loan or line of credit is a borrowing option that uses something that you own as collateral – typically, your house - to back the loan. Mortgages and Home Equity Lines of Credit are common examples of secured credit products.

Additional points to consider:

  • With a secured loan or line of credit, the lender can take possession of your collateral if you don't repay the loan as you have agreed.
  • Because of the existence of collateral, secured loans generally have lower interest rates and higher borrowing limits, making them attractive if you need to borrow a larger amount.
  • In some cases, when you use your home as collateral, the interest you pay may be tax deductible - check with your tax advisor.

What is a Unsecured Loan?

An unsecured loan is a borrowing option approved without the need for collateral. This option is tied to your commitment to pay your loan as promised in your credit agreement. Personal Loans are common types of unsecured credit products.

Additional points to consider:

  • An unsecured loan avoids having to use your personal assets as collateral.
  • Your creditworthiness is an important factor for getting approved for an unsecured loan.
  • Unsecured loans generally have a higher interest rate than secured loans.

Questions to Ask

Now that you understand the basic differences between lines of credit and loans, here are a few questions to ask yourself:

  • How much do I need to borrow? Do I need a fixed amount or the flexibility to use up to a certain amount, as needed?
  • Do I have collateral that I can secure to a loan or line of credit? Do I want to use that collateral to borrow?
  • Am I more comfortable with a predictable monthly payment or a payment that varies based upon how I borrow?
  • What type of loan or line of credit best meets my needs?

* All loans subject to approval