It’s often easier to get approved for personal loans that require collateral, like your home or car. But many people don’t like the idea of putting their personal property at risk. That’s why many people choose to take out a signature loan.
A signature loan is an easier way to taking out a loan, but it’s not going to be the right choice for everyone.
Here is an overview of providers that can connect you with numerous signature lenders based on your credit profile.
MoneyMutual assists individuals in finding lenders that will work with them based on their credit history. They are able to provide signature loans up to $2,500. Once you are matched with a lender, you may choose to accept or decline their offer. If you choose to accept, you could have the money in as little as 24 hours.
As their name implies, BadCreditLoans.com specializes in pairing individuals with lenders who will approve you for a loan despite your credit history. The lenders working beside BadCreditLoans.com have a lending maximum of $5,000 and expect you to be employed or on social security at the time of applying.
CashUSA is a popular option when needing flexibility while applying for a signature loan. You can borrow up to $10,000. A credit check is required upon applying. Most lenders will require you to make at least $1,000 a month to qualify for a loan.
What is a signature loan?
A signature loan is a type of unsecured personal loan that is often referred to as a “good faith” loan because you’re guaranteeing that you will satisfy the terms of that loan. They aren’t secured with any type of collateral.
Signature loans are typically offered by banks, credit unions, and online lenders and can be taken out for any purpose. However, these unsecured loans are most commonly used to pay down debt, cover home repairs, or pay back medical expenses.
You can apply for a signature loan online or in-person, and your lender will run a credit check. Once you’ve been approved for a loan, you’ll sign a contract stating that you promise to pay the loan back. The contract will outline details like:
- The total loan amount
- The interest rate
- Your repayment terms
- Your monthly due date
- The consequences for failing to repay the loan
Unlike credit cards, a signature loan is not a revolving line of credit. This is a personal loan that can be used for everyday expenses, medical expenses, home improvements, or debt consolidation. You will be given a specific amount of money and will pay it back within a set time period.
When are signature loans a good idea?
There are advantages to being able to take out signature loans, but it won’t be the best option for everyone. Depending on your credit score, you could end up with a higher interest rate. However, there are a few scenarios when taking out a personal loan makes sense.
- You have excellent credit: Signature loans are ideal for consumers that have excellent credit. This will ensure that you qualify for low interest rates and favorable repayment terms.
- You’re consolidating high-interest credit card debt: It’s no secret that credit cards come with exorbitantly high interest rates. If you’ve racked up a lot of debt, you’ll likely end up paying thousands of dollars in interest over the life of the loan. In this scenario, it might make sense for you to take out a low-interest personal loan to consolidate your debt. Just make sure the payoff is worth it and that you don’t wind up in a bigger financial mess.
- You have good financial habits: Unfortunately, too many people get trapped in a cycle of debt. They pay down their down only to rack it up once again. Make sure you have good financial habits and a plan for how you’ll repay the loan quickly.
How do I apply for a signature loan?
It’s pretty easy to apply and qualify for signature loans. Before you start the application process, you’ll want to check your credit report first. Make sure you find and address any inaccuracies before you apply for a new loan.
You’ll also want to spend some time researching different lenders. If your credit score isn’t as high as you would like, there are lenders who are willing to give loans to individuals with bad credit.
Once you’ve laid the groundwork, you’re ready to apply for your signature loan. To get started, just follow this simple three-step process.
1. Compare offers from different lenders
To get started, you’ll want to get pre-approved by several different lenders so you can compare your offers. Pre-approval involves a soft pull on your credit and won’t damage your credit score.
To get pre-approved, you’ll need to give the lender the following information:
- Your name
- Your birthdate
- Your address
- Your Social Security Number
- The requested loan amount
- Your desired monthly payments
- The purpose of the loan
Pre-approval is usually pretty quick, and you should receive a decision within minutes. Make sure you get pre-approved by multiple lenders and compare the total loan amount, the APR, the repayment terms, and any other noteworthy features.
2. Complete the application
Once you’ve decided on a lender, it’s time to fill out the formal application. Your lender will require you to re-enter the information you gave during pre-qualification. The lender also may ask for your employment status, your monthly income, and your financial information.
Make sure you read through the lender’s terms and conditions very carefully before agreeing to anything. Once you’ve done that, you can digitally sign the document and give your lender permission to run a hard pull on your credit.
3. Get approved and sign the loan agreement
Once you’ve submitted your application, you should be approved for the loan fairly quickly. How soon you receive the money depends on the lender. But it’s not uncommon for lenders to submit the funds within the same day or on the next business date.
Things to Watch Out For
Taking out a signature loan can be a great option, but there are certain things you need to watch out for. The biggest risk of taking out any type of personal loan is the potential costs associated with that loan.
If you have a low credit score, you may still be able to get approved for a signature loan. But you also may end up with an interest rate that’s as high as most credit cards.
Plus, some lenders add in all sorts of fees, which can cause the cost of the loan to add up very quickly. This includes things like origination fees, late payment fees, or early payoff fees. This is why it’s so important to understand the loan terms before agreeing to take out a signature loan.
If you’re looking to take out an unsecured personal loan, a signature loan could be a good way to go. Make sure you do your homework first and know what you’re getting into.
And most importantly, make sure that you have a plan to improve your financial situation going forward. Start saving money and focusing on building up an emergency fund. This will help ensure that you don’t need to borrow money to pay for unexpected expenses in the future.