What is a Signature Loan?
Signature loans are a type of loan that do not necessitate any type collateral. These types of loans are called signature loans as a result of the borrower utilizing their signature as a guarantee of the loan. A more common name for this type of financing is unsecured personal loans.

What Are the Qualifications?
When considering approval, the two most influential variables lenders utilize are going to be your credit history and how much debt you encompass. Since you are not securing the loan with any type of collateral, it is important that you maximize your chances for approval by making sure your credit scores are the best they can be. Meaning, you ensure all three of your credit scores are not only up-to-date but are accurate. Therefore, prior to applying for a signature loan, we suggest you obtain a free copy of all three of your credit scores by clicking here. Getting your scores will allow you to correct any outdated or erroneous info as well as see where your credit is hurting. If upon viewing, your credit is not what you thought, there are things you can do to help you improve your credit score and rating.

How much debt you have is an equally critical factor lenders look at when considering signature loan approvals. If you are utilizing more than 50% of your credit card limits, it would be wise to pay your cards down prior to applying. In addition, if your overall debt-to-income is more than 55% then achieving financing may be difficult. Learn what you can do to manage your debt.

Again, since you are only securing your loan with your signature, lenders are going to want to see both strong credit histories and low debt ratios.

Understanding Signature Loan Interest Rates
As a result of no collateral being tied to the loan, interest rates associated with signature loans are higher in comparison to secured loans (mortgages, car loans). The rate you receive is going to be dependent on what type of risk you are. Risk is determine based on what your credit rating is as well as your ability to repay the loan (repayment capabilities are dependent on your debt ratios). Obviously, the lower risk you are, the more favorable your interest rates are going to be.

 


 

 

 

 

 

 

 

 

 

 

 

 

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