Signature loans are unsecured personal loans that don’t require you to put down collateral when you apply. Instead, lenders will heavily weigh your financial situation, taking your credit score and debt-to-income ratio into consideration when determining eligibility. Here are a few other things to know about signature loans:
Here’s what you should know:
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Because signature loans aren’t secured, lenders will rely more heavily on your creditworthiness, weighing your credit score and debt-to-income ratio rather than your collateral. This makes signature loans best for those with good credit scores and low debt-to-income ratios. Having a good credit score can also give you the best chance at qualifying for a lender’s lowest APR rates.
Struggling to qualify for a signature loan? Here are seven tips on how to increase your credit score.
Signature loans are a form of personal loans. Personal loans can be unsecured or secured — secured meaning the loan requires collateral, such as a vehicle or home. Signature loans fall into the unsecured personal loan category so these types of loan are more heavily based on a borrower’s creditworthiness and promise of repayment. If you’re struggling to get your credit score up, however, there are bad credit loans available.
Yes, a signature loan is an unsecured personal loan. You’re not required to put down collateral, and you can borrow the money with just your signature. The amount you can borrow is typically based on your credit history and income.
It depends on the lender. Some lenders can fund you the same business day that you are approved. Other lenders can take days or weeks to disburse your loan.
Some lenders may charge you an origination fee to process your loan application. The origination fee is usually expressed as a percentage of the loan amount. You may also encounter other fees, such as a prepayment penalty (if you pay off your loan early) or a late payment fee.
Your lender may charge you a late fee depending on how many days it receives payment beyond your due date. The amount you’ll pay and the number of days before you incur a late fee will depend on your lender. If you go long enough without paying your loan, your credit score may take a hit.
Be wary of no credit check signature loans — they are likely payday loans, which have a high cost of borrowing and a short repayment period.
The credit score needed for a loan will depend on the lender you’re borrowing with. For example, while SoFi requires a credit score of at least 680, Happy Money has a much lower credit score requirement at 550. However, having a good credit score (at least 670) will generally help your chances of getting approved.
The amount you’re able to borrow will vary from lender to lender. Typically, signature loans range from $1,000 to $50,000, though some lenders offer loans as large as $100,000.