If you are in desperate need of some quick cash, a signature loan may be the ideal solution. A signature loan is similar to an unsecured personal loan because it does not require collateral, only a signature to secure the loan. A signature loan may be hard to get if you do not have a decent credit rating.

Even though a signature loan doesn't have the flexibility as other loans, you can negotiate to get a fairly decent rate. Take a look at the offers from 3 or 4 different banks. Don't just settle on the first offer you receive. Lenders want to compete with each other to find customers so they are more than willing to drop their rates if they know you are looking at other lenders.

Since you are looking into a signature loan, chances are you are struggling to make ends meet. The last thing you want to do is apply for a signature loan to help you and end up paying more money in fees and interest rates over the life of the loan. Lenders will try to take advantage of you because they know you are in need of some quick cash.

One thing you need to watch out for is the monthly payment amounts. You need to obtain a loan that fits your budget, if you don't you will default on the loan and the lender will ruin your credit.

Signature loans are normally called a personal loan. Companies like Citi Financial are known for shelling out thousands of signature loans to needy customers. Depending upon your credit score, you could be looking at a high interest rate. An individual with a credit score of 630 is looking at a 28 percent interest rate on a signature loan. This is a large chunk of change for anyone and it can really make you take a step backwards in paying off your debts.

What do I need to get a signature loan?
In order to obtain a signature loan, you need to have a good credit score. Since you are not putting up any collateral, lenders will take a look at your income. They want to see a borrower that has a good credit score and has a high enough income level to pay back the money they borrow. They will take a look at all of your credit cards and other loans and determine your debt-to-income ratio. If you have a good ratio, you will be approved for the loan.

Some lenders may even offer to consolidate your debt with a signature loan. This is when you roll all of your debt payments into a single monthly payment. If you have a higher interest rate on the signature loan, it isn't a wise decision to utilize a signature loan for debt consolidation. If you have high payment on some of your current debt or you keep getting late fees, a signature loan may be a good option because it can reduce your monthly payment amounts and you no longer need to worry about missing payments to your other creditors. Many people consider a personal loan as placing value on their name. If you have demonstrated the ability to borrow money and pay it back in a timely manner, you are establishing a good name for yourself in the credit world.

If you borrow money from a friend or family member, you are obtaining a signature loan. A friend or family member won't pull your credit score, but they are trusting in your good name. Lenders don't completely trust your good name so this is why they need to order a copy of your credit report and score. They want to make sure you do not have any past due debt payments on your account and they will take a look at your payment history to see if you qualify for a loan.

Ask the lender what their minimum credit score approval amount it. Most lenders will not grant money to anyone that has a credit score below 620. Even if your credit score is 620, you probably won't qualify for a large amount of cash and a decent interest rate.

Boosting your credit score
The best thing you can do to be a qualified candidate for a signature loan is to avoid having missed or late payments. A late payment can stay on your credit report for 7 years, which will hurt your ability to get a loan. The longer a late or missed payment remains on your credit report, the better chance you have at obtaining the loan. Creditors are willing to overlook a missed or late payment if it was a few years ago. Timely payments will give you a higher credit rating, making it easier for a signature loan to be approved.

Besides paying on-time, there are some other things you can do to boost your credit score. Remember, the higher the credit score, the better your chances are for being approved for a personal loan. Take a look at your current debt-to-income ratio. If you have credit cards, you only should be using 50 percent of the total balance or less. Most lenders suggest you use less than 30 percent if you want to increase your credit score. The lower your debt-to-income ratio, the better it is for your credit score.

If you have several credit cards open, do not close them. The more credit you have available, the higher your credit score will be. Try to pay off the balances as soon as you can and get them under 50 percent before you apply for a signature loan.

Options for people with poor credit
If you have poor credit or a mediocre credit score, you can still qualify for a signature loan through the help of a co-signer. Seek out a co-signer that has a high credit score because it will help your chances of obtaining a loan and getting a lower interest rate. Several lenders specialize in helping individuals with poor credit. You may get stuck with a high interest rate, but at least you are getting the quick cash you need. A bank is likely to take a chance on someone with poor credit if they have a co-signer. This way, the bank will still be able to collect on the money if you miss payments and default on your loan.

What can a signature loan be used for?
One of the nicest things about a signature loan is that it can be used for anything you need. Let's say you find out you owe $3,000 in taxes; you can use a signature loan to pay your taxes. The only bad thing is you will have to pay interest on the money you just sent to the government. How about an unexpected medical bill? You can use the signature loan to cover the bill and pay for future costs if you take out some extra cash. Unless the lender states that you cannot use the signature loan for certain things, you can use it however you like. A lot of people turn to signature loans for debt consolidation, home improvements, and college tuition.

When you apply for the loan, know exactly how much money you need. If you are using the loan to pay for immediate expenses, only take out what you need. Some companies will give you the option to take out additional money for a fee. Never apply for the loan if you don't have a specific use in mind, this can get you into trouble quickly. A signature loan is adding to your debt load so you only should take out what you need to keep your debt at a low level.

What happens if I default on a signature loan?
The one thing you really don't want to do is default on your signature loan. In some states, you can actually go to jail for defaulting on a signature loan. Take a look at your state laws before you apply for a signature loan. Most lenders will completely ruin your credit rating if you default on a signature loan. This will make it next to impossible to get a loan in the future. You can also have a hard time getting a job if the employer looks up your credit report. Since you did not front any collateral to obtain the loan, you are obligated to pay it. Most states do not allow bankruptcy to get you out of your personal loan payment obligations.

The best thing you can do if you are struggling to make your payments is to contact your lender and let them know right away. Some companies will restructure the loan for you to provide you with smaller monthly payments. This may mean they will extend the loan for another year or two and boost your interest rate up. A lot of lenders have hardship programs for borrowers that have fallen behind. The hardship programs will allow you to freeze your payments for 30-60 days until you can get back on track. The 2 payments you missed will be tacked onto the end of your loan and you will need to pay some additional fees.