A personal signature loan is a type of unsecured personal installment loan. Personal signature loans are not secured by traditional collateral, such as a home or vehicle. Rather, they are secured by the financial history of the borrower, which is represented by the borrower’s signature.
Unsecured loans differ from secured loans regarding the collateral required to seal a loan deal. Collateral is a piece of property with significant equity, or value, that borrowers can use to secure loan funding. Mortgages and car title loans are two common types of secured loans. Mortgages are secured with the borrower’s property, while car title loans are secured with the borrower’s vehicle title. Should a borrower default on a secured loan, they risk having their collateral repossessed by their lender.
Since borrowers don’t have to offer collateral for personal signature loans, lenders will usually look at the borrower’s credit and financial history instead. Typically, borrowers with a higher credit score and cleaner financial history will receive faster approval, better interest rates, and higher funding amounts on loans. Borrowers with a lower credit score may have a hard time finding approval for certain types of funding and may receive higher rates and lower funding amounts if they are approved.
Bad credit personal signature loans are one way borrowers with a less-than-perfect credit score may access funding. Lenders who offer bad credit loans are willing to work with borrowers who have poor credit, no credit, or even a history of past bankruptcies. These types of loans are usually available online via private direct lenders.
To apply for a personal loan, simply head to the lender’s website and fill out a quick application. From there, the lender will reach out to discuss loan details like your funding amount, interest rates, and payback terms.
Your lender will also request a few documents to confirm your information; those documents are:
- Government-issued photo ID.
- Proof of income.
- Proof of residency.
- Bank account information.
Next, your lender will compile your loan details into a contract, which you will then read and sign. This is when your signature seals the deal on your loan agreement! You should then expect to receive your funds as soon as the same or the next business day.