Signature loans give you a lump sum of money that you will need to repay, plus interest, in 12 - 84 months. These loans require your signature, which represents your good-faith promise to repay the loan and makes the agreement legally binding. You can see the full step-by-step process of how a signature loan works below.
How a Signature Loan Works
The lender reviews your application.
You’ll need to provide some personal and financial information on the loan application, such as your name, address, employment status and income. The lender will evaluate your creditworthiness after you submit the application.
The lender sends you the loan agreement for you to sign.
The lender will send you the official loan agreement for you to sign physically or electronically after you get approved. Your signature makes the loan agreement legally binding.
The lender transfers you a lump sum of money.
The lender will transfer you the funds, typically by electronic bank transfer or by paper check, once you sign the loan agreement. You may be able to receive the funds as soon as the same day you sign or within a few business days of signing.
You use the funds for an expense.
A signature loan can be used for almost anything. Some popular uses include consolidating debt, improving your home and making large purchases.
You make regular payments, plus interest, to the lender.
Signature loans often last for 12 - 84 months. The payments are typically made in equal installments on the same day each month, as well.
The lender will report to credit bureaus.
If you make on-time payments, the lender will report positive information to the credit bureaus, which will increase your credit score. The lender will report negative information to the credit bureaus if you miss due dates, though, which will hurt your score.
The loan account is closed once you pay off the loan.
After your final loan payment is made, the lender will close the account. After that, you won’t owe the lender any more money.
A signature loan is a good idea if the loan is inexpensive compared to your other options and affordable based on your current budget. It’s also best if the expense you’re getting the signature loan for is truly necessary, as you don’t want to take on debt without good reason.
A signature loan is a loan that doesn’t require any collateral other than your signature. You can learn more about when getting a signature loan...
To qualify for a signature loan, you need to be at least 18 years old, be a U.S. citizen or permanent resident, have enough income to afford the loan and meet the lender’s credit score requirement. Generally, you need to have a 580+ credit score to qualify for a signature loan. Signature loans are just unsecured personal loans, so the requirements are the same.
It is usually easy to apply for a signature loan, though getting approved for one depends on factors such as your credit history and income. In general, you’ll need to have a credit score of 580+ to get a decent signature loan and meet other requirements, like being at least 18 years old and having a bank account. Keep in mind, meeting the requirements will not guarantee approval.
The easiest signature loan to get is from Oportun...
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