Unsecured signature loans, as the name suggests, are unsecured in terms they are not backed by any kind of security. The lender gives borrower money solely on the base of his good character not demanding any type of security in return. They are also known as character loans as they are given keeping in mind the good character of the borrower. They are returned in equal installments and can be taken for any purpose a personal loan can be used. You can pay medical bills with this money, plan a vacation, and pay your credit card bill or institutional fees.
Suppose the interest rate charged to you on late payment on a credit card is 9% but you do not have any money. You can get a signature loan on suppose 7.5%. You apply for the loan, pay your credit card bill and save 1.5% extra charge. You can always pay back the loan when you get your pay.
Interest rate charged on signature loans is usually high because the lender does not have any kind of security as a backup. So, to make sure he gets his money back, he charges higher interest rate and makes the repayment installments large so that he can get his money back as soon as possible. Your credit history may be good but there are always chances that you may default and the lender will lose his money.
You do not need to offer any asset of yours to apply for a signature loan. All you need to have is a valid proof of employment and a saving or checking bank account. It is because your money is usually credited in your account.
In this busy life, many people avoid the lengthy and time taking procedures banks require while applying for a loan. They have their own list of documents that need to be fulfilled, background check requirements and long lasting loan approval procedures. Most of the people, these days, do not have time for this. So they prefer unsecured signature loans that offer untiring applying processes, faster approvals and quick money. You just need to fill out an online application that asks your personal details, proof of jobs, social security number, contact number to apply for the loan and it declares the decision within no time. So you do not have to wait for a long time to get your loan approved.