We get asked this question a lot and thought we’d help you understand what a signature loan is.
It’s a variety of personal unsecured loan provided by banks as well as other finance companies that utilizes just the borrower’s signature and promise to repay as collateral.
A signature loan could be utilized for any purpose the borrower chooses, however the loan rates will probably be more than most types of credit because of the absence of any real collateral.
These loans are also referred to as a “good faith loan” or “character loan”.
The lending company will typically just be looking for a decent credit history along with a income source when deciding whether or not to issue a signature loan. A co-signer might be requested from the lender, however the co-signer would simply be signing a promissory note, and will be contacted only in case the borrower is not able to pay back the loan.
Rate of interest on signature loans can run high – even more than charge cards. Borrowers should only choose this method when they’re in great need and have the income to pay back the loan.