For people in a brief financial bind, there are various types of loans available to help. A car title loan puts up your vehicle as collateral for a short-term, low-interest loan to put some quick cash in your pocket. For some less severe situations, a payday loan – simply a loan you agree to pay back using funds from your next paycheck – can be used.
Simplest of all these, however, is the signature loan. This is usually the quickest process of all – at Utah Money Center, we even look to approve you over the phone or via email so you’ll spend under 15 minutes in our store. Here are the basics of a signature loan.
What is a Signature Loan?
A signature is what it sounds like: A loan which requires no further collateral than simply your signature. They’re also called unsecured loans. The signature guarantees that you’ll repay the money, but there is no specific property for the loaning agency to come after if you default on the loan.
For this reason, signature loans are usually for generally lower amounts of money. The exact maximum allowable amount depends on the institution loaning the money.
What Determines Your Interest Rate?
Interest rates for signature loans are generally pretty high, as a way to make up for the added risk of loaning money to someone who isn’t putting anything up against it. Factors involved in deciding your exact interest rate will include:
- Credit score: Higher the score, lower the interest.
- Total amount borrowed: This is actually inverted – the higher the amount, the lower the interest, and vice versa. The reason for this is that statistically, default likelihood is higher for lower amounts of money.
- Repayment term: Longer terms generally mean higher interest rates.
- Separate business with lender: In some cases, if the borrower has a prior business relationship with the lender, they can get a better rate.
Benefits of Signature Loans
Signature loans can be beneficial for people in several situations. A few common examples:
- Starting a business
- Making an investment
- Debt consolidation
If you are interested in a signature loan Utah Money Center today can help you today.