What are Signature Loans? Top 5 Signature Loan Providers (2024)

Emergencies can come anytime, so it is important to have some savings. But if you do not have any savings or your savings are not enough, you can seek a loan. There are various types and categories of loans, some need a security deposit, and some do not. Signature loans are also a kind of unsecured loan. 

Signature loans are basically those loans where the borrower does not need to give any collateral or security, it is simply given to him on the basis of his character and good faith, believing that the borrower will repay the loan on time. The borrower just needs to sign the loan papers stating that he will repay the loan as per the terms and conditions of the loan agreement. 

In this article, we are going to give you all the information regarding the signature loan, what it is, how it is different from other kinds of loans, what is the eligibility criteria to get a signature loan, and basically everything that you need to know. We will also tell you about the top 5 signature loan lenders that will offer you a hassle-free signature loan. So are you ready? Let’s dive in!  

What is a Signature Loan? 

A signature loan is an unsecured loan. This means that you do not need to give any security or collateral to get this loan. It is simply given to you on the basis of your credit score and good faith, considering that you will repay the loan on time. It only needs your signature as collateral. That is why they are also called good faith loans or character loans. 

Since you do not pay any security and the lender puts their money at high risk, these loans come with high interest, fees, and annual percentage rates. It is a kind of personal loan so you can use the loan amount for any purpose that you want. You do not need to tell the lender why you need a loan. 

The loan amount of a signature loan may vary from $5,000 to $50,000, depending on your credit score and to get this loan, your credit score should be at least 650 points. The loan term may vary from 1 year to 5 years. You can get a signature loan from banks, credit unions as well as online money lenders. 

Merits of Signature Loans 

Now that you know what a signature loan is, let’s have a look at some of its advantages.  

1. Easy to Obtain

Signature loans are typically easier to get than other types of loans, as they only require a signature as collateral. You do not need to worry about paying any security or giving something as collateral. 

2. No Collateral or Security Required 

Unlike secured loans, signature loans do not require any assets to be put up as collateral or pay any security fee. Moreover, you can get these loans on your own, it does not require any co-signer either. 

3. Flexible Use

A signature loan can be used for a variety of purposes, including debt consolidation, home improvement, as well as emergency expenses. Also, You do not need to tell your lender why you need the money. 

4. No Credit Check

Some lenders offer signature loans no credit check, making them accessible to people with poor or no credit. But most signature loan lenders only offer you loans if your credit score is fair to excellent. 

5. Quick Access to Funds

Signature loans can be processed quickly, allowing borrowers to access funds in a timely manner. While traditional lenders might take some time, online lenders provide funding within 1 to 2 business days. 

6. Fixed Payments

These loans typically have fixed monthly payments, making budgeting and financial planning easier for borrowers. This way, you can plan your expenses in advance so that you do not have to struggle later. 

7. Build Credit

Repaying a signature loan on time can help improve a borrower’s credit score and build their credit history. Most lenders report your installment payments to all three credit bureaus, namely Experian, Equifax, and TransUnion. 

8. Online Services 

You can easily find lenders that will happily offer you signature loans online. So you can easily get a signature loan while sitting at your home, just with the help of your mobile, laptop, and a stable internet connection. You do not need to search for signature loans near me. 

Demerits of Signature Loans

Just like everything else, the signature loan also comes with its own demerits. Here is a list of some of the disadvantages of the signature loan. 

1. Higher Interest Rates

Since there is no security deposit or collateral, signature loans often come with higher interest rates compared to other types of loans, making them more expensive in the long run. Moreover, the interest rates and APRs of private lenders are over the top. 

2. Short Repayment Terms

Signature loans often have short repayment terms, meaning that borrowers may need to make payments more frequently. If you are not able to repay the loan on time, it can become a huge problem for you. In the worst consequences, the lender might declare your account as charged off. 

3. Limited Loan Amounts

These loans have lower loan amounts compared to other types of loans, limiting the amount of money a borrower can access. It is because there is no collateral so the lender is basically putting its money at risk. 

4. Can Damage Your Credit Report

Even if you get late by 2 or 3 days in paying the monthly installment, you might end up losing some of your credit scores. In the worst scenario, if you do not pay the installment for more than 180 days, the lender might declare your account as charged off which will stay on your credit report for 7 long years and will harm your credit score. 

Signature Loan Working Process

A signature loan works in a very simple and easy way. You just need to apply for the loan along with all your required details, documents, and the loan amount that you need. There is no need to provide any collateral. Once your loan application is approved, you will receive the fund. 

After a certain time, your loan repayment will start and you will need to repay the loan in the form of monthly installments. You will need to make sure that you pay all the loan installments on time otherwise it can lead to harsh consequences. The interest rates and APR would be higher for the signature loan. 

How Much Money Can You Get Through Signature Loans? 

The loan amount depends mainly on two factors: 

• Your Credit Score 
• Lender  

If your credit score matches just the minimum required credit score then you will get the minimum loan amount. But if your credit score is higher, you can also qualify for a higher loan amount. Moreover, it also depends on the lender. In general, most lenders offer loans ranging from $5,000 to $100,000. Signature loan rates also depend on the lender. 

Best Signature Loan Lenders

Now that you have all the basic knowledge regarding the signature loan, let’s have a look at the top 5 signature loan providers. We have also included signature loans no credit check providers so that people with bad credit can also get a signature loan. Let’s move ahead. 

1. Best Egg

Does not matter if you are looking for signature loans for federal employees or for any other purpose, Best Egg will always offer you a signature loan where you do not need to give any collateral. They offer their services in almost all the states of the U.S.A. and the loan amount ranges from $2,000 to $50,000. In order to get a signature loan from Best Egg, you need to have a credit score of at least 640. 

Depending on your loan amount and credit score, the APR can be between 8.99% to 35.99%. When you get a loan from Best Egg, you also need to pay an origination fee which can be between 0.99% to 5.99%. The best part about Best Egg is, it allows you to change your installment payment date as per your payday and budget. Moreover, if you have enough funds, you can get rid of the loan earlier, as there is no prepayment fee. 

2. LightStream

If you are looking for a signature loan with low fees and a high loan amount then LightStream is a perfect choice for you. Their loan amount ranges from $5,000 to $100,000. But in order to get a loan from LightStream, you need a credit score of at least 660 points. The loan repayment term ranges from 2 years to 12 years. The best thing about LightStream is, they do not charge any origination, late fee, or prepayment fee. 

This means that you do not need to pay any amount before getting the funding and you can also get free from the loan early without paying any extra fee. Moreover the APR is only 5.99% to 23.99%, which is extremely low as compared to the other money lenders. They also offer autopay service, so that you do not miss any payment. All in all, LightStream is one of the best options out there for signature personal loans. 

3. SoFi

Till today, SoFi has helped many Americans in meeting their financial needs by offering them loans. Be it signature loans for federal employees or jobless people with monthly income, SoFi offers loans to all the people that meet their qualification criteria. In order to get a loan from SoFi, you need to have a credit score of 680 and a stable monthly income. As soon as your loan gets approved, they send you the funding within 2 days. 

They offer loans ranging from $5,000 to $100,000. If you go for their autopay option, you will get a discounted APR of 7.99% to 23.43%. But you will only get the minimum APR if your credit score ranges from very good to excellent. They also offer pre-qualification, so you can find out what rates and loan amounts you would get with your current income and credit score without going through a hard credit pull. 

4. Achieve Personal Loans 

Achieve Personal loans are also a good option for a signature loan. They offer loans ranging from $5,000 to $50,000. Also, the loan repayment term ranges from 24 months to 60 months. They also have a loan origination fee of $1.99% to $6.99%, it depends on your loan amount and credit score. At Achieve Personal Loans, you can also apply for joint loans. They are not online signature loans direct lenders, they just act as a link between the lenders and borrowers. 

To get this loan, your credit score should be at least 620 points. Not just this, but your age should be 18 years and you must be a citizen of the U.S.A. You will also need to provide your other details like job proof, income proof, social security number, etc, then only you would be able to get this loan. They only offer services in a few states. 

5. Discover Loans

If you are looking for online signature loans then Discover Loans is ideal for you. Now you do not need to look for signature loans near me, with the help of Discover Loans, you get easily get loans while sitting at your home, just with the help of your laptop and internet connection. Discover Loans is perfect for your small money needs, they offer loans ranging from $2,500 to $35,000. 

They do not charge any origination fee and you can repay the loan n easy monthly installments. These installments allow you to plan your budget in advance. They charge APR between 6.99% to 24.99%. The minimum required credit score is 660 points. You can use their loans for multiple purposes like debt consolidation, vacation, etc. 

How is a Signature Loan Different from a Personal Loan and a Secured Loan? 

Let us put this in a simple sentence, “All signature loans are personal loans, but all personal loans are not signature loans”. This simply means that a signature loan is a type of personal loan. You can use a signature loan for any purpose that you want. Moreover, personal loans are of both types, secured and unsecured. The signature loan falls in the category of unsecured loans. 

Now coming to the difference between a signature loan and a secured loan, let’s have a look at the following table:

We hope now you have a clear idea about the major differences between secured loans and signature loans. Secured loans need collateral whereas signature loan does not need any collateral. Also, secured loans come with a higher loan term and loan amount and a lower interest rate and APR. 

How to Apply for a Signature Loan? 

Are you planning to get a signature loan? If yes, then you can follow the step-by-step procedure given by us to get a loan easily. Here we will be covering all the points from selecting a perfect lender to how to repay the loan on time. So now let’s get started. 

1. See How Much Amount You Actually Need 

Before actually applying for a signature loan, it is important to figure out, how much money you actually need. Because after all, you will have to repay the loan along with the interest. If you apply for a higher loan amount than you actually need, you will end up dragging the loan for years. Moreover, you will also need to pay extra interest. 

2. Have a Look At Your Credit Score 

After figuring out the loan amount, it is important to see your credit score. Because if your credit score is good to excellent, then only you will get a signature loan. Most lenders offer you a signature loan if your credit score is 650 or above. 

3. Find Out the Potential Lenders and Compare Their Rates 

Now you need to find out the lenders that will give you a loan at your current credit score. You can get the loan both online as well as offline. If you want to go with the offline loan, you can search for a signature loan near me. Otherwise, you can also get a loan online, without rushing to the lender’s office again and again. 

Make a list of all the potential lenders and then compare their important factors like APR, interest rate, origination fee, late fee, prepayment fee, etc. Do not just blindly fall for the low-interest rate, because some loans might come with a low-interest rate, but their fees are very high. Also, do not forget to check the ratings and reviews of the lenders. 

4. Apply for Pre-Qualification 

Once you figure out which lenders can give you the deal, apply for pre-qualification. With this, the lenders will conduct a soft inquiry of your credit score and will let you know about the loan amount and terms you will get. Make sure that you apply for pre-qualification with multiple lenders because this will not harm your credit score and credit report. 

5. Plan Out Repayment 

After you are well aware of the loan and the interest rate you will get, find out your debt-to-income ratio. Figure out which loan fits perfectly with your expenses and salary. Go for a loan that will not make any harsh effects on your lifestyle. 

6. Go With the Best Option 

Now that everything is done, it’s time to send your final loan application. If you searched for signature loans near me, and want to go with offline signature personal loans, then you will need to go to the office of the lender and then submit the loan application. Whereas, if you are going for online signature personal loans then you will need to go to the official website of the lender, create your account and file out the loan request application. 

Also, keep all your important documents like valid ID proof, income proof, address proof, birth certificate, etc handy. Because you might need to attach these personal documents along with your loan application. Once you have filled out the complete application, go through it again and then click on the final submit button to send the loan application.  

7. Receive the Loan Amount 

After submitting the loan application, you just need to wait for the approval. Once your loan application gets approved, you will receive the loan amount in your bank account within 1 to 2 business days. In case your loan application gets rejected, you will need to send your loan application to another lender. 

Things to Consider While Getting Signature Loans

In this section, we are going to tell you about some of the most important factors that you must consider while getting Signature personal loans. Here we go! 

1. Loan Amount and Interest Rate

Determine how much money you need to borrow and the repayment terms, including the interest rate and monthly payments. Because if might feel nice to have a good amount of cash in hand at the start, but you will face trouble in repaying it for years.  

2. Credit Score

Signature loans often require a good credit score to be approved and have favorable terms. Be sure to check your credit score and improve it if necessary. If your credit score is bad and you are not sure if you will get a signature loan or not then you can also go with secured loan options like title loans and bad credit personal loans. 

3. Collateral or Co-Signer 

A signature loan is unsecured, meaning you do not need to put up collateral. However, some lenders may require a cosigner to secure the loan. Some lenders also offer joint loan requests for a signature loan. 

4. Lender’s Reputation

Do research on the lender to ensure they have a good reputation and a history of fair lending practices. Because these days, there are many fraud lenders in the market. To do this, you can check the online ratings and reviews of lenders from their previous customers. 

5. Loan Fee

Be aware of any fees associated with the loan, such as origination fees, prepayment penalties, or late fees. Because some lenders might offer you a signature loan at a low-interest rate but have several hidden fees as well. 

6. Loan Purpose

Since a signature loan is a type of personal loan, you can use it for personal expenses, but some lenders may restrict how the funds can be used. So make sure that you check with the lender if you can use the loan amount for a particular purpose or not. 

7. Alternatives

Consider alternative options such as a personal line of credit, a credit card, or a loan from a family member before taking out a signature loan. Because a signature loan comes with a high-interest rate which might go out of budget for you.  

8. Terms and Conditions 

Make sure that you read the terms and conditions of the loan agreement carefully before making the final deal to ensure you understand the terms and conditions, including any hidden fees.

Eligibility Criteria for a Signature Loan

In order to get a signature loan, you will need to qualify for the eligibility criteria, otherwise, your loan request would simply be denied. Here is a list of some of the common qualifications for a signature loan. Eligibility criteria may vary by lender, so be sure to check the specific requirements of the lender you are interested in.

1. Age: You must be of legal age, usually 18 or older, to be eligible for a signature loan.
2. Residency: You must be a citizen or resident of the U.S.A. to get a loan from any lender. 
3. Income: It is important to have a stable monthly income. You will need to provide proof of a steady income to the lender so that they can believe that you would be able to repay the loan. 
4. Credit History and Credit Score: A good credit history and score are important factors in determining eligibility for a signature loan. You need to have a credit score of at least 650 points with no active bankruptcies. 
5. Bank Account: Most lenders require a checking or savings account to deposit loan funds and withdraw payments.
6. Debt-to-Income Ratio: Your debt-to-income ratio, which is the amount of debt you have relative to your income, will be evaluated to determine if you can afford the loan repayment.

Where Can I Use a Signature Loan? 

As you know by now, a signature loan is a type of personal loan. So you can use it for any personal use. But some lenders might restrict you to use the loan amount for certain purposes. Here are some of the most common uses of the signature loan: 

• Debt Consolidation: You can use a signature loan to pay off high-interest credit card debt or other debts.
• Home Improvements: If your house needs some urgent renovations or repairs you can get a signature loan. 
• Medical Expenses: A loan can also be used to pay for medical bills or procedures. They are the best loans in case of medical emergencies because of their fast funding feature. 
• Wedding Expenses: You can use the funds of a signature loan to cover the cost of a wedding.
• Vacation: If you want to go on a vacation but do not have the money for it then you can get a signature loan to finance a trip or vacation.
• Education: It is better to get an education loan. But if due for any reason, you are not able to get an education loan, you can use a signature loan as well to pay for tuition or student loans.
• Auto Expenses: If you are planning to get a new car or your old car needs a repair then the funds of the signature loan can be used to purchase a vehicle or pay for car repairs.
• Business Expenses: Are you planning to start or grow a small business? Do not worry, you can take a business loan for this purpose. 

Where Can I Get a Signature Loan From? 

You can get a signature loan from online and offline direct lenders as well as traditional lenders like banks. Here are some of the lenders that can provide you with a signature loan. Let’s have a look at them. 

1. Online Lenders 

There are several online services and direct lenders that can offer you a signature loan. You can either go for the signature loans online direct lenders or money lending companies that offer you loans directly. There are many online direct lenders that offer personal loans with no income verification. But if you decide to go for an online loan, make sure that you check the reviews and ratings of the lenders from their previous customers. 

2. Banks 

If your credit score is excellent then you can also get a signature loan from a bank. Banks generally offer loans at a low-interest rate as compared to other private lenders. In order to get a loan from the bank, now you do not even need to go to the bank itself. Most banks offer online loans and other services these says. 

3. Credit Unions

You can also get a signature loan from a credit union. But credit unions generally ask for a higher credit score and only offer loans to those people who are their members. Also, the interest rates and fees are high. 

Frequently Asked Questions (FAQs)

Q1. Are signature loans hard to get?

It totally depends on where you are applying for the loan. If you are applying for a signature loan online then you would only need a stable income and a good credit score. Whereas if you are applying for a loan at a bank or credit union then there might be some other qualifications as well. 

Q2. How much can you borrow on a signature loan?

The loan amount depends on your credit score and income. Most lenders offer a signature loan ranging from $1,000 to $100,000. People often get a signature loan of up to $50,000 easily with a credit score of 650 points. 

Q3. Do signature loans require a credit check?

Yes. Most signature loans require a credit check to determine the borrower’s creditworthiness. They only offer loans to people with good to excellent credit scores. But some lenders might also offer signature loans with no credit checks. 

Q4. What is a signature loan from a credit union?

Credit Unions are non-profitable unions that help financial help to people in need by offering them loans. They also offer signature loans. But you will only qualify for a signature loan from a credit union if you have an excellent credit score and you are a member of that credit union. 

Are Signature Loans an Ideal Choice for You? 

A signature loan would work for you or not, it totally depends on your need. First, you should try to go for a secured loan. If you do not get a secured loan then you can consider going for signature loans. Because the interest rate of a signature loan is extremely high and the loan amount is also low. A signature loan will only work for you if you need the money instantly and you have a good credit score.