The Power of Your Name
A signature loan is any loan relying primarily on your personal credibility and credit history for approval. Rather than putting up your home, car, or other personal property as collateral, you’re literally asking the lender to trust your good name and to accept your signature as sufficient guarantee the loan will be repaid in a timely manner. In other words, a signature loan – also known as a “character loan” or “good faith loan” – is essentially a personal loan that doesn’t require collateral.
Signature loans can be used for anything you like. They’re typically structured as traditional installment loans, meaning that repayment is scheduled on a monthly basis with an unchanging amount due each time. When the loan is paid in full, the account is closed. Interest rates may be higher than similar loans secured by collateral, although this will vary with your actual credit score and complete credit history.
When considering a signature loan, check with your local bank or credit union. Ask about promotional rates or new customer offers. In the 21st century, however, there are numerous sources for signature loans online, including lenders who specialize in signature loans for bad credit. The turnaround time is typically brief and the paperwork relatively minimal, and how you spend the loan is entirely up to you. Few loans are more flexible or straightforward. As you pay back the balance, your credit history improves, your credit score benefits, and you now have a positive history with a reliable lender eager to retain your business in future endeavors.