Signature Loans

There's always a certain level of risk involved when issuing and receiving a loan. But putting your signature to a loan, is more than just letters on a piece of paper. Its your word of honor.

About Signature Loans

Signature loans are a favorite source of loan, because it does not require the need to have sterling credit, nor put up any type of collateral. Instead of physical collateral, "Signature Loans" rely solely on the word and the integrity of the borrower to pay the loan back. This "good faith loan," as its also commonly known, relies on the signature of the borrower as the necessary collateral, and thus is highly reserved for special individuals at financial institutions.

Because there is a great deal of risk involved with Signature Loans, they can come with considerably high interest rates. As a determining factor in issuing a Signature Loan, a lender may do an extensive credit background check. The better your credit score, the better your chances in receiving this highly lucrative loan. Another determining factor is proof of an income that can payback the loan. It is also not uncommon for the lender to require a co-signer before giving the green light to a "Signature Loan." It is important to note that co-signer is not responsible for providing the initial payments, but will be called upon to do so, if the actual person receiving the loan defaults.

Usually, there are no stipulations as to how the Signature Loan can be used or spent. In order to receive more funds, you will need to first pay off the loan you have, plus the applicable interest. If you fail to payback the loan, nothing will be taken from you, since nothing was put up as collateral in the first place, instead, you will receive a mark on your credit score, which can further hinder your ability to receive loans in the future.

Other types of Signature Loans, include peer to peer loans. A relatively new type of Signature Loan, Peer To Peer Loans, tend to come at lower interest rates, and to be issued by companies through the internet, as opposed to traditional financial institutions. Typical interest rates for Signature Loans, average between 7 to 8%. If you're considering this unsecured loan, and you have the credit to vouch for you, you can find many reputable lenders online, or you can visit the financial institution of your choice, in person.