Personal Loans

Can You Get a Signature Loan With No Credit Check?

When it comes to a quick, no-hassle way to borrow money, many consumers may consider turning to signature loans. As their name implies, you often don’t need much more than your signature to secure one.

Before you sign on that dotted line or submit your signature electronically, though, there are some things you should know about signature loans and what it really takes to secure one.

How signature loans work

Signature loans are a type of unsecured personal loans that are offered by many banks and credit unions. After checking your income and credit, a lender takes your word that you’ll repay the loan without any type of collateral to secure it. Signature loans typically come with a fixed interest rate, and you’re responsible for paying back the amount you borrow in fixed monthly payments over a set period of time.

Simple, right? In some cases, yes. But not all “signature” loans are what they seem. Some have the potential to seriously complicate your financial life.

How to get a signature loan

Signature loans from reputable lenders can be a solid option in some cases. If you’re looking to consolidate debt or need funds to pay for home remodeling or other projects, they’re worth exploring. Even if your credit isn’t top-notch or your income is unsteady, you may be able to secure a bad-credit loan. The interest rate may be higher than that of some secured loans, but it will be significantly less than that of payday loans, cash advances and title loans, which are sometimes advertised as signature loans.

Just make sure you know exactly what you’re getting into before you take out a loan of any kind.  Regardless of the type of loan you’re considering, it’s important to research different lenders and examine your finances before applying.

Can I get a signature loan without a credit check?

It doesn’t take much more than your John Hancock to get a signature loan, but the “more” required by most reputable banks and credit unions is good credit and a stable income. While they’re taking your word for the most part that you’ll repay the loan, they do want some reassurance that you’re able to do so. This means that, normally, you can’t get a signature loan without a credit check.

But what about those places that advertise signature loans without a credit check? Two words: Be careful. Yes, there are storefronts and online companies that will loan you cash without any kind of credit check, but the trade-offs for that “easy money” can hit your financial health hard.

Beware these alternative loan options

Being strapped for cash is stressful and can leave you feeling panicked and desperate. Unfortunately, far too many companies try to capitalize on that for their own profit. While you may feel like you have no other choice in some instances, make sure you know exactly what you’re getting into when someone advertises a loan that sounds a little too easy.

While the following may be advertised as signature loans, there are some significant differences that are potentially dangerous for your financial health.

Payday loans

Payday loans are quite easy to secure, both through storefront lenders and online companies, depending on the state in which you live. You typically just need proof of income, a bank account and some form of identification, and boom — cash in hand. You can usually get up to $500 and have about two weeks to pay it back. The idea is that amount will tide you over until your next paycheck when you can pay the loan back.

Perfect, right? Far from it.

Payday loans typically come with sky-high interest rates. We’re talking as much as 400% interest in some cases. Not only that, some will allow you to roll over a loan if you’re not able to repay it within the set terms of the loan. That sounds nice, except for the fees they charge you for doing so and all that additional interest that accumulates when you do.

“Many people think of payday loans as a quick fix when they need money fast,” said Leslie Tayne, a financial debt resolution attorney with Tayne Law Group in New York. “But payday loans are incredibly dangerous for your financial situation and are even illegal in some states, such as New York.”

According to Tayne, payday loans often put people on a fast track to a debt cycle.

“Because of the high interest rates, they’re challenging to pay off, and many end up taking out other loans to pay off the payday loan or pay money to extend the length of the loan,” she said. “Payday loans are only a temporary fix, ignoring the big-picture problem and creating unhealthy financial habits.”

Title loans

Title loans are another option frequently offered to cash-strapped individuals with less-than-stellar credit. Title loans are secured with the title to your vehicle as collateral, meaning if you aren’t able to pay the loan back, you could lose your wheels. And it happens all too frequently. According to the Consumer Financial Protection Bureau, as many as 20% of people who take out auto title loans have their cars seized.

These loans also come with astronomical interest rates and fees that make them difficult to pay off. Car title loans carry interest rates of up to 300 percent and fees as high as 25 percent of the cost of the loan. They also typically offer the option to roll over the loan if you can’t pay it off under the original terms, which means you can keep your car for a while, but the costs will continue adding up, and you can find yourself drowning in debt.

The bottom line

Many people find themselves in need of extra cash from time to time, and signature loans may seem like a quick and convenient way to get it. Just proceed with caution, know exactly what you’re getting into, and keep in mind that that, like with most things, what seems too good to be true usually is.

 

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