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LSDefine
Simple English definitions for legal terms
signature loan
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A quick definition of signature loan:
A signature loan is a type of loan where you borrow money without having to give anything as collateral. This means that you don't have to put up your house or car as security. Instead, the lender trusts you to pay back the loan based on your promise or signature. To get a signature loan, you need to have a good credit score and a stable income. It's important to pay back the loan on time to avoid damaging your credit score.A more thorough explanation:
A signature loan is a type of loan that is unsecured, meaning it is not backed by collateral such as a house or car. Instead, the loan is based solely on the borrower's promise or signature. To obtain a signature loan, the borrower must have a good credit score and a stable income.
Example: John needs to borrow $10,000 to pay for his wedding. He applies for a signature loan at his bank and is approved based on his good credit score and steady job.
This example illustrates how a signature loan is granted based on the borrower's creditworthiness and promise to repay the loan, without the need for collateral.