Signature Loan

The term Signature Loan may sound to you fancy. But it is not. It is a Simple type of Personal Loan without any collateral.

Definition: – Signature Loan -

- Wikipedia: A Signature loan is a loan that is not backed by collateral. Also known as a Unsecured loan or personal loan.

- Investopedia: A type of personal loan offered by banks and other finance companies that uses only the borrower's signature and promise to pay as collateral.
A signature loan can typically be used for any purpose the borrower chooses, although the interest rates will be higher than most forms of credit due to the lack of any real collateral.  
Also known as a "good faith loan" or "character loan".

- A loan for which no collateral is pledged.

- An unsecured personal loan based on a borrower's credit history.

Explanation: -

Banks will give Signature Loans also known as Personal Loans to those who fulfill the following 2 criterias.

01) A Solid Credit History

02) A Solid Source of Income

Sometimes a Bank may ask for a co-signer. but the co-signer would only be signing a promissory note, and would be called upon only in the event that the borrower is unable to repay the loan.

Finance Gurus Say that, Signature Loans are the one of the worst Debt Products after Credit Cards. Because their Interest rates are very high. So Borrowers should avoid these type of loans if possible. Even if in case of acute Emergency, one should consider the other options to raise the money rather than blindly go for a Signature Loan.