There are many different types of loans available to you as a consumer. With so many options, it can be a bit overwhelming at times to sift through them all. Sometimes though, some of those choices are the same thing referred to in different ways. This includes signature loans.
Indeed, signature loans are synonymous with unsecured loans. This means you do not have to provide collateral (unlike secured loans, which do require collateral).
The name “signature loan” is more literal than symbolic. You might think of someone’s signature dance move, for example. But there are no dance moves involved with this loan (unless you insist, of course). Instead, “signature” simply refers to you signing your name on the loan.
Essentially, you are signing a legally-binding contract agreeing to repay the loan. With it is the implication that legal action can be taken against you if you don’t make your payments. While that may not be a pleasant thought, you shouldn’t have issues if you make payments as agreed.
Keep in mind you may also have trouble finding a favorable signature loan if you have bad credit. You could even be denied entirely, and state regulations apply as well. Nevertheless, you may still have options, and that’s what we’ll cover here.
Best Signature Loans Online
If your credit history isn’t the best, you might think it would be difficult to find a lender to approve you. While there is some truth to that belief, there are several lending networks that can connect you with potential lenders.
On these lending networks, all you have to do is fill out a basic eligibility form. Provided you meet the initial requirements, you’ll be connected with dozens of potential lenders. The lenders you see will all be third parties; in other words, the lending networks are only a middle man. They don’t lend money themselves.
If the lending network presents you with an offer that seems worth considering, the rest of the process will be handled on the outside lender’s website. Although you will have already met the lending network’s requirements at this point, the lender likely has its own requirements.
In order to determine your eligibility with that lender, you will likely have to fill out another form. From there, it will be up to the individual lender whether to approve you for a signature loan.
$500 - $5,000
3 to 60 months
BadCreditLoans.com is a site geared toward those with less than stellar credit, so they know what to expect from you. Loan amounts range from $500 to $5,000, and the process is quick and easy.
You could have a loan decision within minutes and receive funds potentially as soon as the next business day. Just fill out an eligibility form and find out whether you are pre-qualified. At that point, you’ll work with a third-party lender on a potential loan.
Features and Benefits
- No obligation or fee to check loan approval
- High approval rate despite credit history
- Funds available as soon as next business day
- Assisting people with bad credit since 1998
$500 - $10,000
3 to 72 months
As low as 5.99%
CashUSA has slightly larger loans available, with loans available from $500 to $10,000. All are encouraged to apply, no matter how good – or bad – your credit score may be.
APR on these loans ranges from 5.99% to 35.99%, and terms are from 90 days to 72 months. The application is a simple form, asking only a few questions. If approved, you could receive a direct deposit for the loan amount agreed upon.
Features and Benefits
- Flexible borrower requirements
- Loan request can be approved within minutes
- Money deposited as early as 1 business day
- All credit types accepted
$500 - $35,000
3 to 72 months
Lastly, this loan network offers the widest variety of all the sites mentioned here. Loans from PersonalLoans.com can be as little as $500 or as large as $35,000. It’s worth noting, however, that the largest loan amounts will be reserved for those with excellent credit.
Nevertheless, there is no harm in applying. The initial application is easy, and there should not be a hard inquiry into your credit unless you apply with a third-party lender. If approved, you could have your money as soon as the next business day. The money can be used for any purpose, and residents of all 50 US states are eligible.
Features and Benefits
- Multiple loan types available
- Fast loan decision
- Funds deposited as soon as you accept an offer
- Nationwide availability
Signature Loans vs. Unsecured Loans
Simply put, there is actually no difference between the two. These two terms are synonymous. So, then, what is the appeal of signature loans?
From the borrower’s perspective, the lack of collateral is what’s most attractive. Because you don’t have to provide collateral in exchange for signing on to the loan, you have (seemingly) less risk. The lender won’t be able to repossess your car because you failed to repay your $2,500 loan.
That doesn’t preclude the lender from taking legal action against you in such a situation. However, there are legal costs involved for the lender, so they would have to decide whether pursuing legal action is worth the cost.
Due to this high risk and potential that lenders won’t recoup all of their costs, rates on signature loans can be high. That high interest rate is meant to protect the lender against potential default by a high-risk borrower.
That may not happen if you have excellent credit, but those whose credit score is low will find themselves with high APR. Similarly, you probably won’t be approved for a $35,000 signature loan if you have bad credit.
What Are Short-Term Loans?
Short-term loans serve several purposes, both for the lender and for the borrower. As their name implies, these loans are expected to be repaid within a short time period. That puts them in contrast with a mortgage, which you probably won’t be able to repay quickly. Short-term loans are typically capped at $2,500 with a 90-day to 72-month repayment term.
If your credit score is low (below 630), it is likely that this is the only type of loan for which you will be approved. That is to protect lender, as these loans are smaller with higher fees than some other types of loans. If you can naturally raise your credit score, you will eventually be able to gain approval for loans with lower fees.
Short-term loans often have three-digit fees, while longer-term loans (often called installment loans) have fees capped at 35.99%.
Your credit score, also referred to as your creditworthiness, quite literally shows how worth you are of credit. In order to be worthy of better loan terms, you must first have a healthy credit score.
Things to Know Before Taking on a Loan
It’s important to weigh all of your options when taking out a loan – as well as whether the loan is a good deal for you. It may be worth checking several lending networks to be sure you find best deal possible.
Be sure you know what your payments will be before you sign for the loan. If you keep a budget, how do payments on the loan fit into it? Keeping up with your payments is important, so you may need to make cuts in your budget if you can’t. Otherwise, you may need to evaluate other loan options.
Taking on a longer term isn’t always ideal, but missing payments will probably be worse in the long run. This is true for two reasons. Firstly, missing payments on any kind of borrowing – be it personal loans or credit cards – will always hurt your credit score. In fact, payment history is the single largest component of your credit score.
Secondly, because short-term loans often have very high interest rates, they can quickly spiral out of control. Even missing one or two payments can make a short-term loan an unmanageable mess. And even if that isn’t the case, it’s always good measure to make your payments on time.
Be Sure You Know What You’re Signing up For
Short-term loans do have their place in some situations. You might encounter a small expense that can’t wait, but which you also can’t cover with cash at the moment. In such instances, a signature loan might seem ideal.
That may in fact be the case, but it’s important to understand the type of loan to which you are agreeing. If you have bad credit, a short-term signature loan may be all that is available to you. In such cases, it’s important to be sure the loan is affordable.
While it may seem attractive to have only to provide your signature, there are dangers of these loans. That’s especially true for short-term signature loans. Missing payments on a short-term loan can hurt your credit and quickly become unaffordable.
Be sure you shop around using our various loan networks to find the best deal before signing on. Compare rates and loan terms and plug them into a loan calculator. Only if you are certain you can afford the loan should you agree to it.
If you can’t afford it, it would behoove you to look elsewhere. After all, an unaffordable loan is never a good deal for you as a borrower.