Ever thought your signature can be of more value than you imagined? Yes, it is going to be! You can soon get a loan by securing your signature as collateral. While this is something not prevalent in our country, it is important that you get a picture of how this loan works.
What is a Signature Loan?
A signature loan is a type of personal loan that is provided based on the borrower’s signature as collateral. This type of loan does not require a guarantor, however, in some cases, the lender may ask for co-signer who only signs on a promissory note. The interest rate and the loan amount are determined by the borrower’s credit history and repaying ability.
The loan can be used for all your personal needs such as emergencies, home improvement, debt consolidation, vacation, education etc.
The Power of Being Credit Healthy:
What makes the lender give you a loan just by considering your signature as collateral? When you apply for a loan, all lenders do a hard check on your credit history. They pull out your credit report from the credit bureaus and analyse your past credit behaviour. A neat credit history without any flaws of defaults and delinquencies becomes an ultimate winner in the eyes of the lenders. A solid credit history with good track of payment records is what becomes the basis for giving out signature loans. The lenders confide in your loyalty and reliability. When you realise the power of being credit healthy, getting a signature loan becomes easy at terms favourable to you.
Signature Loans with Bad Credit:
What if you have a long credit history, but laden with defaults or negative issue. Will I still get a signature loan?
The main supporting factor that enables the lenders to provide signature loan is your strong credit history. If you had defaulted on your loans or credit card bill payments, it could be difficult to get a signature loan. After having paid off your past dues, you might become eligible for a signature loan but with higher rates.