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What is a signature loan?

Signature loans are loans that are unsecured. These loans are only backed by the signature of the borrower. This loan can also be called a good faith loan. Signature loans are offered by banks, credit unions, and other financial institutions.

What are signature loan interest rates?

This loan attracts a higher rate because the lender bears a bigger risk. This loan also has a shorter term. The loan term ranges from a few months to five years.  With signature loans, lenders primarily look at the borrower’s ability to pay the loan. The lending requirements usually include high income, high credit scores, and low debt load.

Other requirements include the following:

  1. You should be a citizen of the United States.
  2. You should be at least 18 years old.
  3. You should also have an active checking account.
  4. You will also need to provide your contact information.

Benefits of a signature loan.

  1. E-signature

Most signature loans are offered by online lenders. These lenders use E-signature which allows you to complete the entire application process online. You will not need to visit the lender’s office to submit your application. You will be able to do everything online and this means you can apply for the loan at your convenience. The E-signature also fast tracks the process and you can receive the cash faster.

  1. Fast Application process

You can complete the loan application process in less than 10 minutes. You will not need to submit a lot of information compared to traditional loans. You will only need to provide your employment information, personal details, credit history, bank details, and contact information.  

If you get all these information ready before applying, you will be done in no time. The good thing about the application process is that you will know if you have been approved for the loan in no time.

  1. Loan Purpose

The loan amount varies and there are no restrictions on what you can use the cash for. You can use the loan to improve your home, relocates, and undertake several other projects. You can also use it to consolidate your loan or take care of emergency expenses.

Is a Signature Loan the Same as Unsecured Loan?

Yes, in fact, another name for a signature loan is an unsecured loan. The lender does not request for any form of mortgage or equity when it comes to this loan type. You should, however, note that it is difficult to get signature loans since the lending requirements are higher than that of secured loans.

How Much Can I Borrow When I Apply for A signature Loan?

With a signature loan, the loan amount varies. The lender may decide on the amount based on your credit score and income. In short, the lender looks at your creditworthiness. However, you can get as little as $500 in loans. You can also get as high as $50,000 when you qualify for it.

What is the Interest Rate on Signature Loans

The interest rate varies, however, it depends on your creditworthiness. You will enjoy lower rates if you have a high credit score and a good credit history. Generally, the interest rate on signature loans is higher than secured loans since the lender incurs a higher risk when they offer unsecured loans.

The rates are usually fixed and the loan term ranges from a few months to five years. The maximum term is five years because most signature loans are short term loans.

Can I Get a Signature Loan When I Have Bad Credit?

Yes. It is possible to get a signature loan even if you have bad credit, however, it is not easy. These loans also come with high interest rates. If you are unable to secure a signature loan, you should consider applying with a co-signer.

A co-signer is someone who is signing as your guarantor. He or she is saying that he or she will be responsible for the loan if you are unable to repay the loan. It is easier to get a loan with a co-signer than without one.

Types of Signature Loans

Signature loans come in several packages including the following:

  1. Convertible loans
  2. Payday loans
  3. Fixed loans
  4. Online loans
  5. Single-payment loans
  6. Installment

It is important to compare loan options before applying for one. You should first check your credit score to know your stand before you apply for the loan. You should compare loan requirements, rates, and available amounts so that you can get the best option.  

Sharon Kirschner

Lindsey is a financial consultant and blogger who mainly writes about personal loans and money management. She already has a number of articles and blog posts about the subject and continues to post more about the best tips and tricks on these topics.
Sharon Kirschner

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