Signature Loans 101: Common FAQs From Interested Borrowers
Are you looking to finance a purchase and need a loan? If so, a signature loan may be an option. Take a look at a few things to know before seeking a lender.
How difficult is it to get a signature loan?
Signature loans are not the easiest loans to obtain. Not all lenders offer signature loans, and the requirements to obtain this level of funding can be more stringent than a standard personal loan. Therefore, it is best to work with signature loan services if you are an interested borrower.
Is a signature loan the same thing as a personal loan?
A signature loan and a personal loan are different in a few ways. For one, personal loans tend to require that you have some kind of collateral to secure the debt. In the event you do not pay back the loan, the signature loan service can collect the collateral. Signature loans do not require collateral. Other differences between signature versus personal loans include:
- Loan term differences
- Differences in what type of payments are expected
- Interest rate differences
- Differences in the types of lenders that offer the loans
Do you need good credit to obtain a signature loan?
When you apply for a signature loan, you do not have to use any personal property for collateral. You are essentially offering just your word that you will pay back what you borrowed with the agreed-upon terms. Therefore, a lender will do an in-depth review of your credit history and score before deciding to offer you a signature loan.
Will a signature loan help you build your credit?
Signature loans can help you build your credit score over the life of the loan. Just like other types of loans, these loan products and how they are treated by the borrowing consumer are reported to major credit bureaus. While you do typically need a good credit score to obtain a signature loan, this is something to consider if you are in the process of trying to elevate your scores even further. Just be sure to stay focused on making your payments on time and fulfilling the initial loan agreement.
What is the loan term on a signature loan?
The loan term on a signature loan can vary depending on the lender and the size of the loan. The general time frame may be anywhere from a few months to a few years. The lender will typically work with you to set up a loan term that works for you and creates a payment that you can easily afford.
Contact a local signature loan service to learn more.
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