What are Signature Loans?
Accessible and affordable personal loans without guarantors, this is how you could describe online signature loans in just a few words:Borrow up to $25,000; 36 Month repayment term; No Guarantors Required.
About signature loans:
Online signature loans are also known as personal loans or installment loans. Essentially they are unsecured loans that you can apply for online. Unsecured loans do not require the borrower to provide any collateral; the borrower's signature and promise to repay the loans is sufficient as collateral for these types of loans, that's why sometimes these loans are also called "good faith loans" or "character loans".
However just because the borrower does not provide collateral that doesn't mean that there are no risks or downsides. One of the downsides to unsecured loans is the interest rate. Because there is no need for guarantors the risk to the lender is higher which is why the interest rates also tend to be higher than those of secured loans.
Also if a borrower refuses to repay the loan or does not repay on time this will have a negative impact on the borrower's credit score. These kinds of actions lead to bad credit scores and bad credit scores lead to reduced chances of approval for future loans as well as higher interest rates.
There are however many advantages to online signature loans aside from being able to apply without a guarantor. For instance::
- You can apply with co-signer;This will increase your chances of approval if you have low income and a less than perfect credit score.
- You can use the loan for anything;
Personal loans do not have a predetermined reason for it's use like other loans such as: student loans or home loans.
- You can apply with most types of income:
Full time, part time, military employment, unemployed, retired, on benefits or unemployed.
Up to $25,000 can be borrowed with a single installment loan.
Repay the loan in 36 months with small installments.
Low rates compared to other online loans. Varies from customer to customer.
Signature loans are most of all unsecured so there is no need to provide any collateral.
Bad Credit Scores and Signature Loans:
A bad credit score does not mean that you cannot apply for a loan but it does limit your chances of approval. If you do want to apply you can do so with the help of a co-signer with a good credit score and high income. This will increase your chances of approval. Also by making all your payments on time you could in time improve your credit score.
Credit Checks and Online Signature Loans:
Because there is no need for borrowers to provide collateral when applying for a personal loan, lenders tend to put more emphasis on their credit score to determine their eligibility. Lenders perform credit checks with the help of credit reporting agencies such as Experian before the customer can be approved for a personal loan.
Like all financial products, signature loans have advantages and disadvantages but compared to other online loans, they are more flexible and more affordable.
