What Is a Signature Loan?

A signature loan is a fixed-rate, unsecured personal loan backed by your signature as your promise to repay.

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Updated May 13, 2025 2:10 p.m. PDT · 2 min read

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Nerdy takeaways

A signature loan is a fixed-rate loan that doesn’t need collateral, only your signature and promise to repay.
Loan amounts can range from $1,000 to $100,000 depending on the lender and your creditworthiness.
Signature loans are commonly used for consolidating higher interest debt.

What is a signature loan?

As the name suggests, a signature loan is secured by your signature instead of collateral, like a car or mortgage paid on your home.

A signature loan is a fixed-rate, unsecured personal loan offered by an online lender, bank or credit union. Amounts can vary from $1,000 to $100,000 with annual percentage rates (APR) that typically range from 7% to 36%.

Getting approved for a signature loan will likely depend on your creditworthiness. The best way to use a signature loan is to improve your financial situation, such as by consolidating and paying off high-interest debts.

» COMPARE: Best unsecured personal loans

How does a signature loan work?

Since signature loans are unsecured, lenders evaluate you based on your ability to repay. They’ll likely look at your credit score, credit history and debt-to-income ratio when deciding whether to approve or deny your application for a signature loan.

If you’re approved for a signature loan, you’ll receive the loan in a lump sum, and repay it over a set repayment term, usually two to seven years, via monthly installments.

Signature loans come with a fixed APR, which includes interest and any fees, so the monthly payments won’t change over time.

For example, if you’re approved for a two-year, $10,000 signature loan at a 12% APR, you’ll make monthly payments of $471 for the duration of the loan. It will cost $1,298 in interest.

Most financial experts agree that an affordable signature loan has a maximum APR of 36%.

Is a signature loan different from a personal loan?

No, a signature loan is an unsecured personal loan by a different name. Sometimes called a “good faith” loan, lenders determine an amount you qualify to borrow based on your income and credit history, rather than requiring collateral that the lender could repossess for nonpayment. In return, lenders require only a signature to guarantee monthly repayments over the term.

» MORE: What is a personal loan?

What are the best uses of a signature loan?

A signature loan can be used for almost anything, from paying for an emergency car repair to funding a vacation. We recommend using a signature loan only to cover a needed expense or to improve your overall finances.

One of the best ways to use a signature loan is to consolidate debt. If you can qualify for a signature loan with a lower APR than your combined debts, you could use the loan to pay off those debts, then make one simplified payment toward your new loan.

Since that loan has a lower interest rate, you’ll pay less in interest and likely have lower monthly payments. Use our debt consolidation calculator to see how an unsecured loan can help you pay off your debts.

Other uses for a signature loan include funding a home improvement project — ideally one that increases the value of the home — or refinancing an existing personal loan at a lower rate.

» MORE: What are personal loans used for?

Where to get a signature loan

You can get a signature loan from an online lender, bank or credit union. These loans may be called unsecured personal loans, but they’re the same thing.

Online lenders: Online lenders offer unsecured personal loans ranging from $1,000 to $100,000 for borrowers with bad to excellent credit. Those with limited or spotty credit histories may find more options with online lenders, but rates can be higher compared with banks or credit unions. You can apply for these loans online, and they’re often funded the same or next business day.

» COMPARE: Best online loans

Banks: Not all banks offer unsecured personal loans, but those that do usually cater to borrowers with good to excellent credit (690 credit score or higher) with loans from $1,000 to $100,000. You may need to be a current customer to apply for a loan, and customers tend to see the most perks, like rate discounts or higher loan amounts.

» COMPARE: Best bank loans

Credit unions: Credit unions provide unsecured personal loans ranging from $250 to $50,000. If you have fair or bad credit (689 credit score or lower), credit union loans may have especially low rates and flexible terms compared with other lenders. You will need to become a member of the credit union before applying.

How to get a signature loan

Compare and shop: Before applying for a signature loan, shop around to ensure you’re getting the most affordable loan possible, which is typically the one with the lowest APR. Pre-qualifying is one of the best ways to do this and includes filling out a short preliminary application, then submitting to a soft credit check, which won't hurt your credit score. Then, the lender displays the rates and terms you may be eligible for. Pre-qualifying with more than one lender is in your best interest, since there’s no risk to your credit score, and you’ll get to compare more options.Submit your application: After selecting the best offer, you’re ready to submit the application. Applications vary by lender, but most will ask for personal details like your name, Social Security number and contact information, and details about the loan you want, like the loan amount, loan purpose and desired repayment term.Get approved and funded: Once you submit the application, the lender will conduct a hard credit check, which will temporarily lower your credit score by a few points. Many lenders’ application and approval processes are online, but some banks and credit unions may require you to visit a branch. Once you’re approved, you could receive the funds as early as the same day or within one week, depending on the lender.

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NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

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