Signature Loans

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

A signature loan can be used for almost anything, including consolidating debt, improving your home and making a large purchase. Some things that you cannot use a signature loan for include investments, illegal activities and, sometimes, secondary education expenses. Keep in mind that a signature loan is the same as an unsecured personal loan, so they can be used in the same ways.

10 Ways to Use a Signature Loan

1. Debt consolidation
2. Home improvements
3. Medical bills
4. Emergency expenses
5. Weddings
6. Vacations
7. Car repairs
8. Starting a small business
9. Veterinary costs
10. Other large purchases

Using a signature loan for a wedding or a vacation is possible, but it's not a good idea. You will end up paying more for the event due to the fees and interest charges associated with the loan. Instead, you should save your money for these expenses.

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 because they do not require a credit score to qualify. The company also has loan amounts of $300 - $15,400, APRs up to 10.07% - 35.95% and repayment periods of 6 - 46 months. Oportun isn't your only option, though. You can see other easy-to-get signature loans below.

Easiest Signature Loans to Get

To read more about the top-ranked offers, check out WalletHub's picks for the best personal loans for people with no credit and the best personal loans with no credit check. You can also estimate your potential rates when you use our free pre-qualification tool.

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 is a good idea below.

When a Signature Loan is a Good Idea

If the loan's terms are better than your other options

You may get a lower APR on a signature loan than a credit card if you have good or excellent credit. However, some credit cards offer 0% APR introductory periods for as long as 21 months. So, if you need funds for a relatively small expense, a credit card may be a better option.

You may also be able to get a loan with flexible terms from a friend or family member. You risk damaging your relationship if you don't repay the loan, though.

If you know you can repay the loan

Signature loans can take a few months to a few years to repay. You'll need to make sure you can afford the monthly payments, along with your other monthly expenses.

Signature loans will also improve your credit score if you make all the monthly payments and do not default. On the other hand, late payments can cause credit score damage.  

If the expense is necessary

Signature loans can be used for almost anything, such as paying medical bills, consolidating debt or making a large purchase.

You can use a signature loan to pay for weddings or vacations, too. However, it's best to save your money to pay for luxuries like these.  

Final Thoughts

In the end, a signature loan is a good idea if you can repay the loan and if the loan's terms are better than your other options. To see the top-ranked offers, check out WalletHub's picks for the best signature loans. You can also pre-qualify with multiple lenders using the free pre-qualification tool on WalletHub.

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.

How to Qualify for a Signature Loan

Be at least 18 years old

You will need to be at least the legal age to receive a loan in your state to qualify for a signature loan. For most states, it's 18 years old, but in Nebraska and Alabama, it is 19 years old, and in Mississippi it's 21 years old.

Be a U.S. citizen or permanent resident

Lenders will require applicants to be U.S. citizens or permanent residents to qualify for signature loans. Additionally, applicants will need to have a government-issued identification number, such as a Social Security number or Individual Taxpayer Identification Number. Some lenders will accept passports or visas, though.

Have enough income or assets

Applicants will need to have enough income or assets to afford the monthly loan payments. The lender may require you to provide documents to prove your income, like a recent pay stub or tax form.  

Meet the lender's minimum credit score requirement

Signature loans from reputable lenders typically require applicants to have a credit score of 580+. You'll need a higher score to get a signature loan with a low APR and no origination fee, though. You can check your credit score for free on WalletHub.

Have a valid bank account

Lenders typically send you the funds via electronic bank transfer, so you will need to give them your bank account information. Additionally, you may be asked to provide bank account information to prove you have enough income to repay the loan.

Other Lender-Specific Requirements

Some lenders, such as American Express, require applicants to be current customers to qualify for a signature loan. Other lenders, like OppLoans, require applicants to live in certain states, since they do not offer loans nationally.

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