4 Facts About Signature Loans
If you ever run short on cash, you might look for ways to borrow some money to get through these difficult times. You might also need extra cash to pay for home repairs or renovations that you want to complete. If you encounter these situations and do not know where to turn, you could consider a signature loan. Signature loans are ideal for many situations. Here are four facts about them to help you understand what they are and how they work.
1. Signature Loans Come With Different Names
Before you learn anything else about signature loans, it might be helpful to know the various names they go by. Some people call these handshake loans, while others call them good faith loans. Lenders might also refer to them as unsecured loans or character loans. While these loans have different names, they all work in the same way.
2. They Are Unsecured Loans
When you get a signature loan, the loan is unsecured, which is the opposite of a secured loan. A secured loan is one that requires collateral. For example, if you get an auto loan, the car you purchase is the collateral. If you buy a house with a loan, the home is the collateral. A signature loan does not require collateral. Lenders issue them as unsecured loans, which means you do not have to tie an asset to the money you borrow.
3. Signature Loans Are Typically Installment Loans
The next fact to understand about signature loans is that they are installment loans. Any time you borrow money through an installment loan, you repay it through equal payments. You make these payments monthly, and you make them for a specific time. The time might be one year or longer, and the payment amount depends on the amount you borrow, the interest rate, and the duration.
4. These Loans Require Good Credit
The final fact to understand is that your lender will base the decision on your credit and other financial factors. Signature loans are not always easy to get unless you have great credit. A lender will verify your credit, income, and job before approving your loan request. If you have credit problems, you might need a cosigner to qualify for the loan.
After learning these facts about signature loans, are you interested in getting one? If you would like to apply for one, talk to a signature loan lender today.