Four Things to Know About Signature Loans

iQuanti: Signature loans are quick and easy loans that can get you funds as soon as the same day you apply. From cash advances to installment loans, there are many signature loans that come with easy applications and instant approvals. Better yet, these loans don't require you to put down any collateral. Let's dive deeper into how signature loans work and four things you should know before taking one out.

How do signature loans work?

A signature loan is an unsecured short-term loan that you can use to cover expenses. Lenders offering signature loans may look at factors like your credit score, employment history, and income when deciding whether to approve you. These loans come with fixed interest rates and the repayment length can last from a few months to a few years, depending on the lender and loan terms. A signature loan is easy to apply for, and may only require some documentation and your signature to receive the funds.

What to know about signature loans

Signature loans can be a useful way to get money fast. Make sure you know these four things about these loans before applying:

1. No collateral required

Signature loans require no collateral, so you don't have to risk losing an item of value. Your signature alone secures the loan, hence the name.

2. Quick application and funding 

Many lenders offering signature loans have simple application processes. It may only take you a few minutes to fill out an application, and you might be approved for a signature loan instantly if you qualify. Once you agree to the terms and sign the paperwork, you may receive the funds in your bank account the same day you apply.

3. Poor credit options are available

Even though signature loans don't require collateral, there are plenty of options out there available for borrowers with poor credit. Many lenders will consider factors in addition to your credit score when deciding whether to approve you. For instance, they might look at your income and employment history to make sure you can pay the loan back.

4. Prequalification is important

Prequalification involves undergoing a soft credit check (which doesn't hurt your score) so the lender can show you terms you're likely to qualify for. Getting prequalified makes it much easier to shop around for the right loan. Once you get several prequalification offers, you can apply for the loan of your choice instead of applying for multiple loans and going through several hard inquiries (which can have a negative impact on your credit score).

The bottom line

If you need funds quickly and don't want to risk an item you own as collateral, a signature loan may be the right choice for you. Signature loans are easy, fast, and come with more lenient credit score requirements. Make sure you shop around and get a few prequalified offers before formally applying to get good rates and terms. Then, once you apply and get approved, you can start covering expenses right away.

Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: financial services, loans, personal finance, signature loans