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.
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.
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.
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.
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.
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.
Methodology
How we chose the best personal loans
Our team of consumer lending experts follows an objective and robust methodology to rate lenders and pick the best.
35+
Lenders reviewed
We review over 35 lenders, including major banks, top credit unions, leading digital platforms, and high interest installment lenders operating across multiple states.
25+
Categories assessed
Each lender is evaluated across five weighted categories and 27 subcategories, covering affordability, eligibility, consumer experience, flexibility, and application process.
70+
Data points analyzed
Our team tracks and reassesses hundreds of data points annually, including APR ranges, fees, credit requirements, and borrower tools, ensuring up to date, accurate comparisons.
Star rating categories
We evaluate more categories than competitors and carefully weigh how each factor impacts your experience.
Affordability25%
We review lenders’ annual percentage rate offerings at least twice per year and the competitiveness of each lenders’ APR range. We also assess whether a lender charges an origination fee and any opportunity for borrowers to receive a rate discount.
Customer experience20%
We consider the experience of the consumer trying to manage a personal loan, which means accessibility of customer service representatives, whether borrowers can choose and change their payment due date, and the ability to track their loan on a mobile app.
Underwriting and eligibility20%
We consider the rigorousness of each lender’s underwriting practices and how widely available their loans are. This category includes whether a lender does a hard credit check before providing a loan, the range of credit profiles they accept and how many states their loans are offered in.
Loan flexibility20%
We assess how flexible lenders can be with borrowers, including whether they offer multiple loan types, personal loan amounts and repayment term options and whether they offer direct payment to creditors on debt consolidation loans.
Application process15%
We consider the lender’s full application process, including a borrower’s ability to preview their loan offer via pre-qualification, whether basic loan information such as APR range and repayment terms are available and easy to find online and how quickly a loan can be funded after approval.
5.0
Overall score
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial technology companies and financial institutions. We collect over 70 data points 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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