Are you ready to sign on the line? A signature loan really is all about your signature – specifically, the financial power of your name. That's why the loan is sometimes called a "good faith" loan or "character" loan. In many ways, you are putting your own character up as collateral instead of any assets that you might own. These loans can be used for nearly any purpose, but you probably need a strong credit history to qualify.
Is It Right For You?
While they are very versatile, you should also know what you will be using the loan for – like home improvement projects, medical bills, or similar situations.
Pros and ConsPros:
-Easier to acquire – for the right people. If you qualify for a signature loan, the process can be relatively painless.
-Highly versatile. As long as you have good credit and a dependable income, lenders have no problem with you using your signature for – well, for anything that you want.Cons:
-Limited amounts available. Signature loans tend to be for smaller amounts than some types of personal loans, and rarely go above $20,000 for even the most financially solid borrowers.
-Higher rates. Your signature may be worth a lot, but lenders will probably still charge a higher rate than usual for this unsecured loan.
What Else Should I Know About Signature Loans?
Requirements for signature loans can vary. For example, if your credit isn't quite good enough to qualify on your own, lenders may allow you to have a cosigner and still receive the loan. Note that lenders may also take a look at your income to make sure you have the ability to pay the loan off, so this may not be the right option if you are currently looking for employment, even with good credit.