There are times when a person feels overwhelmed with debt. They may lose their job and wonder how they are going to pay their bills or have an emergency come up and find they can’t pay cash for it. Regardless of why a person is having difficulty managing their finances, a signature loan can be of help.
What is a Signature Loan?
A signature loan is a personal loan that a person can get with no collateral. Their signature is enough for the lender to provide the funds. The borrower uses the funds for any purpose, unlike a mortgage or car loan that is secured by the asset.
Getting a Signature Loan
Lenders look at several things when a person is applying for a signature loan. They want to know if the person has a steady income and will be able to make the monthly payments. To determine this, they look at the borrower’s debt-to-income ratio, credit score, and their credit history. This information also plays a role in the interest rate the borrower will pay and the amount of the loan.
Repaying the Loan
In exchange for the funds, the borrower agrees to make monthly payments to the lender. These payments tend to be a fixed amount and come with a set interest rate. In most cases, the repayment period is anywhere from 24 to 60 months, although some lenders do offer shorter or longer loan terms. Compare lenders to find the best interest rate and repayment terms.
Why Might a Person Request a Signature Loan?
When a person thinks of a signature loan, they may view this financial product as a debt consolidation loan. Although many people do use the loan to pay off high-interest credit card debt, the money received can be used for various purposes.
For instance, a person might obtain a signature loan when their car breaks down or a household appliance needs to be replaced. Getting a loan is cheaper than putting the new appliance on a credit card.
In addition, a person might request a signature loan when they have a major life event to pay for. For instance, parents may be helping pay for a child’s wedding. By taking out a loan for a specific amount, they can ensure they don’t go over the established budget and know exactly how much they will pay each month for their contribution to the wedding.
Why Choose a Signature Loan?
With many funding options available today, a person may want to know why they should choose a signature loan. One reason many people select this option is they know they will have cash in hand quickly. In fact, some providers have the money available to the borrower on the same day or within a day or two.
The borrower won’t need collateral to secure the loan, and they will probably pay less in interest than they would if they put the expenses on their credit card. These are only three of many reasons a person might choose a signature loan, and there are several others.
Learn more about signature loans today. Many people find this is the best solution to their financial difficulties. A person can only know this if they understand what a signature loan is and its benefit. Request this information today to determine which solution is right for your needs.