Are you looking for a way to borrow some money, and are you considering a signature loan? Signature loans offer a way to borrow some cash when you need it for almost any reason, but you might want to know a few things about them before applying for one. Here are some facts about signature loans that you should know before you start looking for one to get.
They Do Not Require Collateral
As the name implies, a signature loan is a loan that you can get that requires only a signature. In other words, it does not require collateral. Collateral is something that you might need for other loan types, such as a car loan. When you buy a car with a loan, the vehicle is the collateral. If you do not make the payments, the lender can take the car from you. A signature loan does not have collateral, so the lender cannot take anything from you if you default on the loan.
They Do Require a Credit Check
Lenders assume some risks are involved when issuing signature loans because there is no collateral. Because of this, lenders perform credit checks before approving these loans. You might need a specific credit score to qualify for a signature loan, and you can ask a lender about this if you have questions.
They Require Monthly Payments
When you borrow money through a signature loan, you also get an installment loan. Installment loans require making monthly payments. A car loan is an example of an installment loan. Your payments will be the same each month, and they might last for one year or longer, depending on the amount you borrow.
They Come in All Sizes
You can borrow small amounts of money through signature loans or large amounts. Lenders might issue $1,000 signature loans, and some issue them for as much as $50,000. It just depends on the lender.
You Can Determine How to Use the Proceeds
One of the benefits of a signature loan is that you can use the proceeds for anything. Some people use the money to consolidate their debts, while others use it for vacations. Some people use it for home renovations, but you can use it any way you wish.
After learning these facts about signature loans, you might be ready to apply for one. To apply, find a lender that offers them, and complete the application process they require.