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A signature loan is an unsecured personal loan. This means you don’t need to back it with any collateral, and the lender offers funding based on factors like your credit history. While signature loans are less risky for the borrower, they can come with higher rates and are harder to qualify for than secured loans.
A signature loan gives you funds based on your record of repaying debt. It’s also known as a good-faith or character loan. This is different than a secured loan, which is dependent on the collateral you use to back your loan — like a savings account, car or house.
With a signature loan, you can usually borrow between $2,000 and $50,000 at APRs that range from 4% to 36%. Typically, you can apply online in a few minutes and provide an e-signature instead of a hand-written signature. You can often get your funds as soon as the next business day.
Credit unions are more likely to call their unsecured loans “signature loans,” though any unsecured loan counts as a signature loan. These include:
You might benefit from a signature if some or all of the following apply to you:
Signature loans might be less risky for the borrower, but there are some drawbacks.
The exact process depends on the lender, but generally you’ll follow these steps:
Signature loans are usually installment loans. You repay them with fixed monthly repayments toward the loan balance and interest over three to seven years. Short-term signature loans and bad-credit signature loans sometimes come with weekly repayments and have terms as short as three months.
While a signature loan includes all unsecured loans, most lenders don’t use that name. Your best bet to find a signature loan is to search for a personal loan. And you can get started by reading our guide to personal loans.
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