What is a signature loan used for?

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.... read full answer

How a Signature Loan Works

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

If you think a signature loan is right for you, check out WalletHub’s picks for the best signature loans. Then, you can estimate your potential rates with our free pre-qualification tool.

An example of a signature loan is a standard personal loan. A personal loan is a lump sum of money that can be used for almost anything, like consolidating debt or making a big purchase, and personal loans that don’t require applicants to put anything up as collateral are considered signature loans.... read full answer

The best personal loans are from LightStream. The company offers $5,000 - $100,000 in funding with APRs of 5.99% - 24.49% and repayment periods of 24 - 84 months. You’ll need a credit score of at least 660 to qualify, according to multiple third-party sources.

Best Personal Loans in 2023

For more information, check out WalletHub’s picks for the best signature loans. Then, you can estimate your potential rates with our free pre-qualification tool.