What is a signature loan? | Personal finance

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For example, if you apply for a $10,000 loan with a 3% origination fee, you will actually only get $9,700 from the lender because the origination fee is $300. This is important to consider when calculating how much you need to borrow.

Other miscellaneous costs

Most lenders will charge late fees if you make a payment after the due date. They may also have certain other fees, such as converting your current loan into a new loan if you cannot afford it.

You may also see “prepayment penalties” mentioned for paying off your loan early on other sites. However, prepayment penalties are generally rare or non-existent with reputable lenders.

Is a Signature loan right for me?

Signature loans are good when you want a quick and easy loan to apply for without too much hassle. Since lenders don’t require collateral, checking your credit and financial information is often enough to make a decision. Many signature lenders even offer same-day approvals, and possibly even same-day financing if you apply early enough in the day. You pay for it with a higher cost, however.

Even if your credit score is good, you can often get a lower interest rate by applying for a secured loan instead with collateral, if you have one. If your credit score is good, however, the cost of a signature loan might not be much higher than with a secured loan.

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