What is an Unsecured Signature Loan? Is it a Credit Card? An Unsecured Signature Loan is based on your Signature... An unsecured signature loan is another name for a personal loan with no collateral backing up the financing. Since there is no collateral, the loan is said to be based on your signature, which means your good name.

The lender has the most risk with a signature loan because you have given them nothing of value to compensate them if you default on the loan. With a secured loan, in the event that you default, the lender keeps or repossesses the collateral. If there is no collateral, the lender has nothing to repossess. That is why many financial institutions will look primarily at your credit score before considering you for an unsecured loan.

However, not all unsecured personal loans or signature loans are based on a credit score. For example, if your friend loans you money without any collateral, then your credit score has nothing to do with it. Instead, the value of your friendship is at stake. So your good name is the real collateral, or item at risk, in an unsecured loan scenario. For financial institutions, your friendship is irrelevant.

From prior transactions, your good name, as viewed on your credit report, shows if you have a history of meeting your obligations. Therefore, your good name is reflected by your credit report and resulting credit score.

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1. A personal unsecured loan, where you are individually responsible for repayment (can include a co-signer or several);
2. An unsecured business loan, which leaves the business responsible for repayment; and
3. An unsecured business loan with a personal guarantor, where the business is primarily responsible for repayment, and the guarantor has to take over if the business fails to make the payments.

Within the loan category, there are two main types: installment loans and credit lines.

Installment loans generally have set repayment periods beginning when the account is opened and fixed monthly payments, based on non-variable interest rates.

Credit lines are more like credit cards in that their repayment begins when funds are accessed (which can be any time), fluctuating minimum payments which depend on the balance, and variable interest rates. Also, credit lines can be reused: as the balance is paid down, the line can be accessed up to its limit again and again.

Call us toll-free now at 888-705-5007.  Or fill out our More Information request form below and one of our consultants will contact you at the time you specify.