There are problems with either alternative. The literalists have to face the problem that the bible says some truly awful, disgusting things. If a woman is raped in a city and doesn't cry out (say, because the rapist threatened to kill them if they did), they are supposed to be put to death (the rapist too, at least) - Deuteronomy 22:23-24. Homosexuals and insolent children are also to be put to death. Men who have crushed genitals don't get into heaven. The list is fairly extensive.
On the other hand, if parts of the bible - with no obvious contextual or textual evidence that they are parables (was that the word you were looking for?), fables or metaphors - are not meant to be taken literally, how can we decide any of it is? When the bible says God is Love, how is that any more "literal" than god kiling one million ethiopians, or flooding the entire world? When Elisha curses some youths because they insulted him, and god sends out two she-bears and mauls 42 of them, is that meant to be a parable about respecting bald people? Are there some solid, rigorous criteria by which we can differentiate the "literal" and metaphorical parts of the story that don't resort to special pleading or circular logic? In my experience, no such criteria have been presented.
What I mean is, some parts are obviously parables. Jesus sometimes explicitly says that he is telling a story, and then asks what people think of it. On the other hand, the stories of atrocities in the old testament are present entirely without comment, in fact often boasting of genocide and battle. If these were intended to be taken metaphorically, the text itself (or the appropriate historical context) would indicate that was the case. But Leviticus, with its repulsive bloodlust for minor deviance, is presented entirely as a book of binding laws, while the rest of the Old Testament (the prophets and Genesis excepted), full of god's orders to rape, pillage, enslave and kill, is presented as a thorough history.
TL;DR: literalists must accept the atrocities of the bible, while the others must ignore them.