Signature Loans
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What Is A Signature Loan?
A signature loan is a loan that you can take out for any reason and use the funds at your discretion. Signature loans could be used to pay for wedding expenses, car repairs, medical bills, home improvement projects, debt consolidation, and for other large purchases. In order to qualify for a signature loan, all a borrower needs is their identification, credit score, and income information, although some lenders may ask for more or less information.
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Learn More About Signature Loans
Most signature loans are usually less than five years and even have some lenders who extend signature loans for a short few months for smaller amounts. The interest rate is fixed and the funds are paid back through installments. Learn more about the actual rates for signature loans and more below.
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+What is a signature loan?
A signature loan is a loan that you can take out for any reason and use the funds at your discretion. Signature loans could be used to pay for wedding expenses, car repairs, medical bills, home improvement projects, debt consolidation, and for other large purchases. In order to qualify for a signature loan, all a borrower needs is their identification, credit score, and income information, although some lenders may ask for more or less information. A signature loan does not need to be secured with an asset like a home, car, or other valuable items like gold, silver, etc.
Most signature loans are usually less than five years and even have some lenders who extend signature loans for a short few months for smaller amounts. The interest rate is fixed and the funds are paid back through installments. Typically, lenders want to see at least a good credit score to qualify for a signature loan since there is no collateral involved and the qualification specifications are simply based on your credit score and your income. The better your credit score, the higher your income, and the lower your current monthly debt payments are, all will determine how much you can qualify for and at what fixed interest rate. Typical rates can range from as low as 4% to 5% to as high as 36%. If you are in need of a signature loan from anywhere from a few hundred dollars to upwards of $50,000 and possibly beyond, you can typically obtain one at a bank, credit union, or an online lender.
What is a signature loan used for?
The best part about a signature loan is that you can use the funds for just about anything other than paying for college tuition and illegal activity. Commonly people may use smaller signature loans to cover day-to-day expenses, emergency expenses, and purchases like washers/dryers and other appliances. Larger signature loans may be used more for home improvement projects like putting on a new deck, remodeling a bathroom, or installing new flooring.
Another common use for a signature loan is debt consolidation. Debt consolidation may actually be one of the most intelligent ways of using a signature loan. The reason being is that most people who acquire a signature loan for debt consolidation loan are consolidating debts from high-interest credit cards or previous loans that also contain a higher interest rate. Instead of making 5 or 6 different monthly payments to various creditors, all of who are charging a higher interest rate, a person can qualify for one signature loan with a lower interest rate and pay off all of the individual creditors. Then they can have one simple monthly payment spread out over a specified time depending on the size of the loan. Additionally, they will be able to have a predetermined pay-off date saving them money over the term of the loan. These are just a few examples of what people use signature loans for, however, the main point is that they can be used however you would like.
How does a signature loan work?
A signature loan works like any other personal loan or installment loan. Once approved for the loan, the funds can be deposited directly into your bank account from which you can withdraw the funds and use them as you would like. To be approved for a signature loan, you should have at least a decent credit score, a good income, and a low amount of current monthly debt payments. As you spend the money you were approved for, you can pay back the loan over time with monthly installments. The cost and the number of these monthly installments are determined by the total loan amount, the length of the repayment period, and the interest rate you qualify for. The interest rate is essentially the fee that a lender charges as a payment for its services and for loaning you the money upfront. The interest rate you qualify for is mostly determined by your credit score. The lower your credit score is, the higher your interest rate will be. The higher your credit score, the lower your interest rate will be. Since a signature loan is an unsecured loan, if you should happen to fall behind on your payments or default, there is no collateral for the lender to seize to recoup their losses, however, there are still consequences. A default on a signature loan can do immense damage to your credit score and even cause you to find yourself served with a lawsuit. But, pay back the funds in installments on time and the contract between lender and borrower for a signature loan is honored.
Where can you get a signature loan?
There are many places you may find a signature loan. From your personal bank or credit union to the booming network of online lenders, signature loans are readily available. With multiple options you have more power to find a competitive offer.
. If you are not looking to drive to your bank and would like to safely shop for a signature loan from the comfort of your own home, then you can access dozens of online lenders simply from your computer. You can prequalify, find a lender, apply for a loan, be approved, and receive your funds in as little as 24-hours once approved, although funding times may vary. There are so many online lenders out there that it may become overwhelming. So, here is a quick breakdown of some of the top lenders online and what kinds of borrowers they cater to best. You can access offers from some of these lenders and more at Acorn Finance. By completing one form, you can receive personalized signature loan offers with no impact on your credit score.
LightStream
Best for excellent credit borrowers looking for the lowest rates.
Loan amounts: $5,000 – $100,000
APR: 4.99% – 17.49%
Terms: 2 – 12 years
Origination Fees: None
Minimum income requirement: $50k
Minimum credit score requirement: 660
SoFi
Best for good to excellent credit borrowers who prefer to do all their banking using an app from their phone.
Loan amounts: $5,000 – $100,000
APR: 5.99% – 20.94%
Terms: 2-7 years
Origination Fees: None
Minimum income requirement: $50k
Minimum credit score requirement: 680
Best Egg
Best for fair credit borrowers looking for smaller loans with good interest rates.
Loan amounts: $2,000 – $50,000
APR: 5.00% – 29.99%
Terms: 3 and 5 years
Origination Fees: 0.99% – 6.99%
Minimum income requirement: N/A
Minimum credit score requirement: 600
Prosper
Best for fair credit borrowers who prefer to support peer-to-peer lending.
Loan amounts: $2,000 – $40,000
APR: 8.99% – 35.99%
Terms: 3 and 5 years
Origination Fees: 2.41% – 5%
Minimum income requirement: N/A
Minimum credit score requirement: 600
Upgrade
Best for bad credit borrowers looking to rebuild their credit.
Loan amounts: $1,000 – $50,000
APR: 6.94% – 35.99%
Terms: 3 – 7 years
Origination Fees: 2.9% – 8%
Minimum income requirement: N/A
Minimum credit score requirement: 560
Axos Bank
Best for good to excellent credit borrowers looking to refinance loans for lower rates.
Loan amounts: $5,000 – $50,000
APR: 7.99% – 35.95%
Terms: 1 – 5 years
Origination Fees: 0% – 2%
Minimum income requirement: $48k
Minimum credit score requirement: 700
OneMain Financial
Best for fair credit borrowers who may only work part-time.
Loan amounts: $1,500 – $20,000
APR: 8.98% – 36.00%
Terms: 3 -5 years
Origination Fees: 1% – 10% (or flat fee up to $500 depending on state)
Minimum income requirement: $7.2k
Minimum credit score requirement: 600
Lending Point
Best for fair credit borrowers looking for smaller loan amounts.
Loan amounts: $2,000 – $25,000
APR: 15.49% – 35.49%
Terms: 2 – 4 years
Origination Fees: 0% – 6%
Minimum income requirement: $30k
Minimum credit score requirement: 600
Who should get signature loans?
Signature loans are designed for really just about anyone. The idea of a signature loan is that once approved you may use the funds for whatever you need. If you have a decent credit score and a stable income, then you may be able to use a signature loan to catch up on monthly bills, debt consolidation, a home improvement project, or even a long vacation. The process to apply for a signature loan is quite simple and uncomplicated, meaning that signature loans are accessible to everyone. Ideally, you should only borrow within your means and be fiscally responsible when it comes to taking on any type of line of credit, but if you are in need of a quick surge of cash to take care of some immediate expenses, then a signature loan can provide that to you.
What is the difference between a personal loan and a signature loan?
When you look at what a personal loan is versus a signature loan, they are essentially the same. Some lenders may call it a personal loan, others a signature loan, but the concept is the same. They are both unsecured personal loans that can be awarded to you based on your creditworthiness and income. They are paid in monthly installments over a predetermined period of time and in exchange interest is charged. Both a personal loan and a signature loan are extremely convenient to obtain and you can use the funds to your own discretion.
Is a signature loan a good idea?
A signature loan may be a good idea for anyone who is in need of some immediate funds to take care of some expenses, complete a project, or make a large purchase. If you are someone who, for example, would like to complete some home renovations and updates, then a signature loan is a fast way to get money to start the project immediately. Other forms of home renovation financing can take a long time and involve a lot of paperwork. A signature loan can get you money immediately and since it is unsecured, you do not need to use your home or its equity to secure the loan. Or, if you rely on your vehicle for work and suddenly it needs some repairs you do not have the money for, then yes, you can get a signature loan immediately to pay for those repairs so you can get your vehicle operational again and get you back to work. Or, maybe you just simply started falling behind on your monthly expenses like rent, groceries, childcare, other day-to-day expenses, then yes a signature loan might be a good idea.
What is an example of a signature loan?
An example of a signature loan is an unsecured personal loan. Let's say your honeymoon is coming up and you are a little low on cash after paying for your dream wedding. You certainly would not want to miss out on the experience of a honeymoon so you could go get a signature loan to finance the cost. The lender would need your information and you would need to qualify. As long as you qualified, you would just need to sign to accept the loan and set out on your adventure. Of course, you will be responsible for the monthly payment until the loan is repaid and it may cost more than paying cash, but at least you got to kick the married life off with a trip you'll remember for a lifetime.
Do signature loans require a credit check?
Most lenders will require a credit check to lend some money through a signature loan since there is no collateral being used to secure the loan. However, there may be some lenders that can do short-term no credit check signature loans for smaller amounts. The only concern about these no credit check signature loans is that they often contain very high-interest rates and additional fees. If you are concerned about whether or not your credit score is good enough to qualify for a personal loan, the best way to find out is to prequalify. The prequalification process only takes a few minutes and then you can see which lenders may consider you for a signature loan based on your credit history.
What credit score is needed for a signature loan?
Typically most lenders will require a credit above 600 for a signature loan, however, some lenders may require a credit score much higher than 600 to qualify. Some lenders require scores as high as 680 or 700 to even be considered for a signature loan, however, they offer the lowest rates. On the opposite end of the spectrum, some lenders may extend signature loans to borrowers with scores as low as 560 in exchange for much higher rates and fees. If you cannot qualify for a signature loan on your own, you could always consider a secured loan option.
What is the interest rate on a signature loan?
Interest rates on signature loans vary by lender and mainly are determined by your credit score. Borrowers with credit scores on the low end of the spectrum can sometimes pay interest rates as high as 36%. On the higher end, interest rates can get as low as 4% or 5%. The typical range is 4% to 36% on signature loans.
How much can you borrow with a signature loan?
Most lenders cap their signature loans at $50,000 or below, however, there are a few lenders that can extend loans as high as $100,000 for those with the best credit and strongest incomes. The highest amount possible for a signature loan is $100,000.
How long does it take to get approved for a signature loan?
The approval process for signature loans varies by lender. Some lenders may require a few days to approve a signature loan, but many online lenders offer same-day approval. Some lenders advertise funding times. If you need funds quickly you should ask the lender what their approval and funding times typically are. Some may be faster than others. In most cases, online lenders have the fastest approval and funding times. At Acorn Finance, our lending partners can fund loans in as little as 1-2 business days, although funding times may vary.
Can I apply for a signature loan online?
Yes, applying for and obtaining a signature online is actually one of the easiest and quickest ways to have access to your funds. The prequalification and loan approval process can be done all on the same day. Once you are approved, you could see the funds deposited into your account the same or the next day. Some lenders even offer same-day funding if the loan application is approved by a specified time.
How do you apply for a signature loan?
First, you'll need to decide where you want to apply. Whether you choose to use a financial institution you already have a relationship with or start a new relationship with a lender, figure out who you want to apply with. Taking advantage of online platforms that allow you to compare loan offers from several lenders in one place can be beneficial. When borrowing money you will always want to find the cheapest loan. Some borrowers may hyperfocus on the monthly payment but it's important to look at total loan costs.
When you are ready, you can check offers or pre qualify through the lender or platform of your choice. Next, select the offer you want to accept and finalize the loan with the lender. In some cases, you may need to submit documentation such as proof of income or identification before being approved. Pre Qualifications and approvals are different and it's important to know the difference. If you are prequalified you are not guaranteed the loan. For example, if you apply to qualify, the lender may generate a pre qualification. However, this may be contingent upon submitting proof of income. If your proof of income does not match what you submitted on your application, the lender may revoke the offer. If you are approved, all you have to do is accept the loan and await funds in most cases.
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