Sometimes, life happens. Your car breaks down. Your roof collapses. A beloved family pet eats your chocolate bar and needs to visit the vet.
Whatever the situation, if you don’t have a well-funded savings account, you might need to take out an emergency loan to fix your car, repair your roof, or make sure your pooch is fit as a fiddle.
The challenge is finding a loan that doesn’t require you to pay excessive interest rates, like title loans, or put up your house as collateral. That’s where signature loans, also known as a “good faith” or “character loan,” come into play.
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What does a signature loan mean?
Signature loans are unsecured loans that require no collateral other than your signature – hence the name. But because you don’t need to guarantee these loans against an item of value, they may come with more stringent income and credit history requirements than other loans.
If you qualify, signature loans make a great tool for covering emergency expenses or paying off your debt with less interest. But before you sign on the dotted line, let’s dive a little deeper into how they work.
Are signature loans hard to get?
Whether or not you’re eligible for a signature loan depends on your credit score, repayment history, and income. Thus, your chances of qualifying depends on how responsibly you’ve spent money and repaid your debts in the past.
For example, getting a signature loan is easier if you have excellent credit and a high income. And while it is possible to get a loan with a bad credit score, you may have to pay higher interest.
How long does it take to get approved for a signature loan?
Several factors influence how long it takes to get approved for a signature loan. After you shop around for the right lender, you have to apply for the loan, which may involve gathering paperwork such as:
- Recent pay stubs
- Proof of residence
- Social Security number
Then, the lender has to undergo the underwriting process, which includes reviewing your information, checking your credit, and determining the borrowing limit and interest rate. This process alone takes anywhere from an hour to a week.
And then, if you’re approved, you have to sign for the loan. From there, you might even have to wait a day or more after that to receive your funds.
But MoneyLion offers same-day virtual funding via Credit Builder Plus loans and InstacashTM. Whether you need a loan to fix your car, pay for your house, or save your dog, MoneyLion makes it easy to get the money you need in a matter of hours—if not minutes!
Do signature loans hurt your credit?
Like most credit applications, applying for a signature loan usually triggers a hard inquiry on your credit report. In most cases, a single hard inquiry won’t affect your credit score too much – but it can still drop you by a few points.
However, taking out a Credit Builder Plus loan from MoneyLion involves no hard credit checks. Not to mention, you can build your credit as much as 60 points in 60 days with monthly reporting to all three credit bureaus!
Can you get a loan from a bank without being a member?
While most brick-and-mortar banks don’t require you to be a member to get a loan, having an active account can give you better leverage. This is especially true for individuals with a short or nonexistent credit history.
But with MoneyLion, no prior history is needed. All you have to do is sign up for a RoarMoneySM account, get a virtual card, receive an account number, and apply for your loan. Once you’re approved, the money will be deposited into your account the same day!
Advantages of signature loans
Applying for a signature loan from a brick-and-mortar bank comes with a few advantages. For instance, since all you need for approval is a decent credit history and your signature, you don’t have to worry about losing your car if you can’t pay up.
Plus, their interest rates typically run lower than predatory payday loans, though they may still be higher than a secured loan. Not to mention, if you have an account with the bank, you may qualify for a bigger loan or better interest rate.
Disadvantages of signature loans
Applying for a signature loan at a traditional bank compared to a virtual bank comes with its own set of downsides, too. One of the biggest downsides is the time it takes to receive funding, which can range from a day to over a week. For those seeking a true emergency loan, that may be several days too long to wait.
Plus, if you have bad credit, you’ll either risk rejection or have to take on high-interest rates. And if you need to take on larger amounts of debt, you’ll be hard-pressed to find a bank willing to give you a loan on the value of your signature alone. Some banks may even require you to find a cosigner to guarantee they’ll get their money back, which can add time—and paperwork—to the process.
Signature loan vs personal loan
When it comes to a signature loan vs personal loan, they’re essentially the same thing. In fact, signature loans are just a type of unsecured personal loan. As such, they use many of the same criteria to determine eligibility and interest rates.
That said, personal loans can also be secured, meaning that they require collateral such as your car or house to qualify for the loan. Signature loans, on the other hand, never require collateral. Your signature itself is your promise to pay.
Who needs a signature loan when you have Credit Builder Plus?
If you’re in need of quick cash, taking out a signature loan may give you the short-term boost that you need. Instead of going through the hassle of applying for a loan and taking a hit on your credit score, why not try a Credit Builder loan from MoneyLion?
With a whole suite of financial tools and services available at your fingertips—not to mention boosting your credit score in as little as 60 days—a MoneyLion Credit Builder Plus membership can put you on the path to success for just $19.99 per month!