Signature loans, also known as "good faith" loans, are a good option when borrowers need quick cash. These loans often only require the borrower's name, income, credit history, and signature to apply and get approval.
If a borrower is looking for a loan they can get quickly without putting down any collateral, a signature loan might be a good choice. Here's how signature loans work and how borrowers can apply for one.
How do signature loans work?
Signature loans are unsecured personal loans that don't require borrowers to use an asset, like their house or car, as collateral. Signature loans often come in the form of installment loans, which give borrowers a lump sum of money they'll back in fixed monthly payments. These loans provide the borrower with a fixed loan amount, interest rate, and repayment schedule.
Borrowers can use signature loans for various purposes, including:
- Emergency expenses
- Home renovations
- Large purchases
- Consolidating or refinancing debt
- Vacations
Lenders look at information like income, credit score and history, employment history, and current debts when deciding whether to approve borrowers. Many lenders have less strict requirements, so borrowers may get approved for a signature loan with a poor or fair credit score.
Applying for a signature loan
Applying for a signature loan is quick and easy. Borrowers will need to have some basic information on hand, including:
- Name
- Mailing address
- Contact information (email address, phone number)
- Social Security number
- Proof of income (pay stubs, bank statements, tax returns, or profit and loss statements for the self-employed)
If the lender conducts hard credit inquiries, the borrower may also need to authorize a credit check.
Here are the steps to apply for a signature loan:
- Gather all information and documents needed to apply.
- Apply for a signature loan.
- If approved, review the terms.
- Accept the loan terms by signing the paperwork.
- Receive the funds.
Many lenders that offer signature loans will give borrowers the funds quickly once they get approved, sometimes the same day they apply or within 24 hours.
The bottom line
Signature loans can be a great option for borrowers who need cash quickly. Many of these loans only require some basic information and take a few minutes to apply for, and borrowers may be able to receive their funds that same day. That said, borrowers should always review their monthly budgets to make sure they can accommodate a signature loan before filling out an application.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
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Original Source: Advance America: How to Apply for a Signature Loan
