Sometimes, we get into emergencies requiring money, but we may not have it then. This can be a daunting experience, especially when you do not know where to get quick cash. While you might have an option of a loan, some involve long and tedious processes, and you might not even be guaranteed success. Nevertheless, signature loans provide a solution to all your problems. The good thing about this loan is that it does not require one to have collateral to be eligible. Moreover, signature loans can be used for numerous purposes, including debt consolidation. Again, these funds are issued quickly, with some lenders completing the process within hours. Click here to find the best signature loans near me.
Signature Loan: What is It?
Simply put, a signature loan includes an unsecured personal loan. Since it is unsecured, this loan does not require the applicant to pledge any collateral, which the lender can seize in case you fail to repay. Instead of a collateral pledge, a signature loan is usually backed up by the applicant’s signature. The signature acts as a legal promise to repay the loan after an agreed-upon period.
Since a signature loan does not involve any securities, lenders usually charge higher interest rates than secured loans. However, the average interest rate for credit cards is typically higher than that of signature loans. Therefore, it is a great option you can consider to fund major life events and emergencies.
How Does The Signature Loan Operate?
Typically, when a lender receives a loan application, they consider various factors such as the credit score, credit history, and income of the respective applicant. These factors are crucial in determining whether one qualifies for a loan, the amount to be issued, and the interest rate to be applied. Your lender will then issue a lump sum upon your loan approval. You will then be required to repay the loan after an agreed period, usually between 24-60 months, depending on the loan size.
Personal Loan Versus Signature Loan: Are They the Same?
A signature loan is a form of personal loan. A personal loan is a term used to describe e various types of loans such as variable rate loans, unsecured loans, secured loans, debt consolidation loans, etc. On the other hand, a signature loan is a form of unsecured personal loan.
Uses of Signature Loans
Usually, the best purpose for a signature loan depends on each individual’s financial needs. Nevertheless, here are some excellent uses of signature loans.
You can acquire a signature loan to help you deal with unplanned expenses like home repairs, car repairs, and medical bills. Besides, the funds can be issued quite fast, thus making it a great option.
You can use a signature loan to consolidate high-interest debts such as credit card debt. Simply put, debt consolidation involves paying your earlier debts with a new one. Selecting a signature loan for debt consolidation helps counter the high-interest rates involved in your existing debt.
Main Life Events
Signature loans come in handy when you need to handle major life events like relocating. However, always adhere to the principle of borrowing only what you can afford.