Signature Loans For People With Bad Credit
What Are Signature Loans?
Signature loans are loans that can be used for basically anything. They don't require collateral at all, in fact the whole point of this type of a loan is getting the funds you need in exchange for 'signing' (agreeing that you will pay the loan back). People use signature loans for everything: buying groceries, paying off credit cards, plastic surgery, vacations, and more.
Since you aren't providing collateral when you take out signature loans, your credit score and income are what determine whether you can get approved for a signature loan or not.
Getting Signature Loans
Traditionally, signature loans have been intended for those people that
have good credit history. Because bad credit is becoming more and more
common, many lenders have structured bad credit signature loans.
Signature loans for bad credit were created for situations where the borrower does not have to offer any type of collateral to the lender for approval. The reason that banks use the term “signature” is because that is the only thing required to secure a loan, a signature. The loan is a contract between the lender and the borrower for a fixed period of time with the borrower promising that he or she will repay the loan in its full amount.
Most lenders will allow you to apply for a loan up to $15,000 if you have good credit. In some cases they may even allow you to borrow more than this. Lenders will look at your personal balance sheet, meaning they will look at how much income you have as well as how many expenses. Lenders want to make sure you will be able to pay back the loan in full and on time.
However, for individuals that have bad credit, a lender may only allow you to take out a loan of a few thousand dollars. This is because you haven't had the best record for paying back loans on time and they don't want to take as much risk on you.
The typical term
that a signature loan carries is between six months to a few years
depending on how much the loan is for. They are structured a lot like auto loans except the interest is higher because of the lack of collateral.
A person with a poor credit score usually has one that is below 650. It is wise for you to understand what your credit score is before you apply for any type of loan. Some of the companies that can report to you what your credit score is are: Experian, Equifax, and Trans Union. If your credit score is below 550 you probably won't be able to get a bad credit signature loan because that would be way too much risk for the lending institution.
Each of these credit rating agencies have a website that you can simply log onto and gain greater in site of what your credit score is. You can also compare the reports from the different agencies and report back to them if you find any discrepancies.
The best place to get a bad credit signature loan is through banks and credit unions. There are other lending institutions as well, but banks and credit unions tend to be the most favorable. Private lenders are becoming more popular because they are ready to negotiate a deal with a borrower for the loan package. They are much more flexible in dealing with borrowers with bad credit.
Wells Fargo Signature Loans
Right now at Wells Fargo you can plan on paying about 11.1% interest for signature loans. Wells Fargo doesn't use the term signature loans and opts to use the term unsecured personal loan. On a $10,000 loan and a 60 month term, you would expect to pay $217.97 if you go through Wells Fargo.
This of course would be for a good credit loan and if you need a bad credit loan through this bank the interest rate will tend to be quite a bit higher. In some cases they may want you to find a cosigner.
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Additional Resources For Individuals With Bad Credit
I have taken some time to put together this resources can may be helpful if you have bad credit. I understand that every one of these won't be useful for every person that reads this Hub, but I hope that somehow it will help out some people that can use the information. If you need information about a specific aspect of credit or bad credit, please feel free to let me know and I'll add to my information base accordingly.