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By Brenda

What Exactly Are Signature Loans?

Apr 25 2014 Parent Category I

While nearly everyone has faced the need for immediate cash, not everyone has been able to locate resources during those times. There are the staples of payday loans and other types of quick cash loans, but that is not always enough to cover an unexpected expense. Sometimes you need more, so where should you turn? The next best place to look would be into lenders that offer signature loans. They have different requirements, so anyone with good or better credit should definitely see these types of personal loans as viable options. Here are some important things to know about signature loans.

 

What Type of Loan is a Signature Loan?

A signature loan is considered a personal loan, but one that is not secured with any type of collateral. This is basically a good-faith loan that you will borrow the money and repay the money according to the terms of the loan. Most signature loans are given based on a person’s credit score, but credit is not the only determining factor. Credit history can play a major role in whether or not you can get a signature loan, as even a lower credit score with a recent history of making all payments on time can still be in the running for many lenders. The better credit you have, the more likely a lender will extend a line of credit to you, and the more likely you will be to get approved for higher loan amounts.

 

What Are Common Terms for Signature Loans?

Some of the most common terms for signature loans include having anywhere from two to five years to repay the loan, there is often a fixed interest rate, and the loan amounts typically range from around $500 on the low end to $20,000 on the high end. The payments should be fixed over a specified period of time, which will be agreed upon when the loan closes. This means that once you sign on the dotted line for the loan, you will be required to pay that amount for all of the months outlined in the documentation. Once all payments are made, the loan will close out and you will no longer have to make those payments. Some loans allow for early repayment, while others have terms within the loan documents about how the lender will handle this request, so make sure you read through everything before signing on the loan.

 

What Can You Use a Signature Loan For?

Signature loans can be used for many different things. Since they are personal loans, they can be used for nearly any personal need you may have. This can include consolidating other debts into one easy payment, paying for a new car or for repairs on your existing car, holiday or vacation expenses, home improvements, or nearly whatever you want to spend your loan on. There are very few restrictions from most lenders on what you must do with an approved signature loan, and some lenders do not have any restrictions at all. So, if you have a specific expense in mind for the loan, find this out before you sign up for this type of loan.

 

Where Can You Find Signature Loans?

Signature loans are typically offered through brick and mortar financial institutions. This can be in the form of your local bank, or it can be in the form of credit unions that are in your area. Shopping around to find the right signature loan may take a little bit of time, but it could end up getting you the best interest rate for the money you need, making that time worth it. Just make sure you find out which lenders are going to offer specific terms, so that you are not having lots of lenders pulling your credit repeatedly. This could cause damage to your credit when other lenders look over your credit history.

Getting a signature loan can make a little financial pinch easier to deal with, and it can give you more freedom when you have an extravagant purchase in mind. Sometimes you just need to be able to update or upgrade something, and a signature loan is often the perfect solution. Just make sure that you know what you need it for, and understand how much that sum will cost you in the long run. That will give you the most value from the loan you are looking to get.

 

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