Signature Loans: Requirements, Costs, and How to Qualify

The term “signature loan” confuses a lot of people, so we’ll start this guide by clarifying exactly what it is. From there, we’ll discuss what lenders require, how much you might be able to borrow, what a signature loan costs, and how the application process works.

What is a signature loan?

A signature loan is another name for an unsecured personal loan. These two terms can be used interchangeably, as they mean the exact same thing. Your signature is your promise to repay the loan. It is not secured by a car, savings account, home, or any other type of collateral. 

You receive the money from a signature loan as a lump sum. It is repaid in a series of fixed monthly installments, and after a set number of months, the loan will be paid in full. 

You’re most likely to see the term “signature loan” used by credit unions and community banks, which is why many borrowers are confused. It’s an unsecured personal loan offered by many financial institutions, though some lenders use different names. 

To be perfectly clear, a signature loan has nothing to do with requiring an electronic signature or using a certain type of document-signing software. 

The funds from a signature loan can be used for almost any purpose. This includes, but is not limited to, debt consolidation, medical bills, home repairs, or large purchases. Some lenders have restrictions (a common one is real estate), so be sure to read the lender’s agreement. 

Signature loan vs secured loan: what’s the difference?

A signature loan is not backed by any specific asset. If you don’t pay, the lender cannot foreclose on your home or repossess your car, to name some common examples of collateral. On the other hand, a secured loan relies on your credit and income, and requires an asset to be used to back the loan. For example, a mortgage loan uses a home as collateral, which lowers the lender’s risk (and may get you a lower interest rate). 

It’s a trade-off between getting the best possible loan terms and putting an asset you own at risk. If you miss enough payments on a secured loan, the lender can take the pledged asset. Although missing payments on a signature loan can certainly hurt your credit, it won’t lead to you losing a specific asset. 

Signature loan requirements: what you need to qualify

Signature loan requirements vary by lender. There is no universally defined credit scoring threshold or overall approval standard. Also, different lenders place different levels of emphasis on certain qualifications, but most look at the same eight categories of information:

• Credit history and credit score: Lenders want to see that you’ve used credit responsibly and have repaid your debts as agreed.
• Income: You’ll need income that a lender can confirm with pay stubs, tax documents, or bank statements. 
• Employment history: A long history in the same field or with the same employer can strengthen a signature loan application. 
• Debt-to-income ratio: Lenders evaluate your current debt obligations against your gross income to determine whether you can afford the monthly payments on a new loan. 
• ID verification: A driver’s license or passport is an example of a document that will satisfy a lender’s identity verification requirement. 
• Citizenship or residency status: Requirements differ, but lenders typically confirm eligibility. 
• Bank account: Most lenders require a bank account in order to deposit your funds. Many lenders also offer a discounted rate for automatic payments from a linked bank account. 
• Age: You must be of legal age to enter into a contract in your state.

What credit score do you need for a signature loan?

There’s no set minimum credit score to qualify for a signature loan. Even if you find a published minimum credit score, treat that as one lender’s policy and not an industry rule. 

That’s why it’s so important to shop around for a loan and compare offers from several different lenders before formally applying. Some lenders also place more emphasis on factors such as education and employment history than others do.

How much can you borrow with a signature loan?

The amount you can borrow varies based on a few factors, especially the lender. 

Smaller community lenders and credit unions often have significantly lower loan limits than the larger online lending platforms. Larger platforms generally offer a wider range, meaning that you’re likely to find lower minimums and higher maximums than you would with smaller lenders.

With that in mind, it’s important to make sure that the amount of money you need to borrow is a good match with the lender before you apply. For example, if you only need to borrow $3,000, a lender whose range is $5,000 to $25,000 doesn’t meet your needs, so there’s no need to apply. 

As mentioned, several factors determine how much you can borrow. Here are the four key variables: 

• The lender’s own maximum (and minimum) for a particular loan product. 
• Your income and how reliable it is.  
• How much of it is already used to cover existing payment obligations (your debt-to-income ratio).
• Your credit history and score. 

As a final point, it’s important to request only the amount you need, not the maximum a lender is willing to provide. Requesting extra funds will result in paying more interest over the loan’s term than necessary, increasing your monthly payment.

What a signature loan costs

There are four different factors that determine what a signature loan costs. Not all of these will apply to every loan, but it’s important to be aware of them when comparing one loan offer to another. 

• Interest rate/APR: The interest rate tells you the cost of borrowing the principal. Your APR includes that interest rate plus certain fees, so it is the better number for an apples-to-apples comparison of different loan offers. It’s quite common for two loans with the exact same interest rate to have different APRs if one has more fees than the others.
• Origination fees: Some lenders charge origination fees, and others don’t. In some cases, origination fees are only charged to certain borrowers (such as those with lower credit scores). If there is an origination fee, it will be reflected in the loan’s APR. The mechanics of personal loan origination fees vary across lenders. Some deduct the origination fee from the loan proceeds, so be aware that the amount you request will determine how much is deposited into your bank account, and the two numbers might not be exactly the same. 
• Term length: A longer term length means a lower monthly payment, but it usually means that you’ll pay more interest over the loan’s term. Signature loan terms commonly range from 24 months to 84 months, and it’s a smart move to pick the shortest term whose payment you can comfortably afford. 
• Prepayment: Most signature loans don’t have an additional charge for paying off the loan early, but some do. This is known as a prepayment penalty, and it’s important to be aware that you’ll have an additional cost if you choose to pay off the loan early. 

Here’s an example of how much a personal loan could cost you. Of course, your situation may be different, but the general idea is to figure out how much your monthly payments add up to, and compare that amount with the loan’s principal. 

Loan detail	Example
Amount borrowed	$10,000
APR	12.00%
Term	48 months
Monthly payment	$263
Total repaid	$12,641
Total interest paid	$2,641

Just to make sure the math is perfectly clear, to determine the total amount you’ll have to repay, multiply the monthly payment of the loan by the number of months in the loan’s term. Then, subtract the amount you originally borrowed to find the total cost of borrowing.

It’s also important to mention that the Federal Reserve reports average interest rates on 24-month personal loans at commercial banks in the United States in its G.19 Consumer Credit release. This can be a good data point for comparing to any loan offer you receive.  

How Upstart evaluates loan applicants

Upstart is an online lending platform through which signature loans are available, often referred to as unsecured personal loans. Signature loans through Upstart range from $1,000 to $75,000⁵.

While signature loans are typically unsecured4 and do not require collateral, a secured option using a vehicle as collateral may also be available within the personal loan application, depending on the applicant’s eligibility.

Key features of loans available through the Upstart platform include:

• AI-powered underwriting: The model considers factors beyond traditional credit scores, such as education² and employment history, potentially increasing accessibility for applicants with limited or adverse credit history.
• Soft credit check: Checking rates through Upstart involves a soft credit inquiry, which does not affect your credit score1.
• Fixed rates and terms: Loans feature fixed interest rates and terms, ensuring consistent monthly payments.

Comparing loan terms through platforms like Upstart allows borrowers to evaluate different offers efficiently. 

It is generally recommended to compare loan options based on APR and total cost over the full term to identify the most suitable choice for individual budget needs.

Frequently asked questions

Is a signature loan the same thing as a personal loan?

A signature loan is an unsecured personal loan, so the terms are synonymous. Credit unions and community banks use the term signature loan more often.

What is the difference between a signature loan and a secured loan?

A signature loan relies on your credit and income for approval. A secured loan relies on your credit and income, and requires collateral, such as a vehicle or bank account.

Does checking rates for a signature loan affect your credit score?

Checking rates generally involves a soft credit inquiry, which doesn’t affect your credit score. A hard inquiry, which can affect your score, only happens when you submit a formal loan application.

What documents do you need to apply for a signature loan?

The exact requirements vary by lender. But most will want to see a government-issued photo ID, as well as proof of income such as pay stubs and tax returns.

Can you get a signature loan with a thin credit file?

Some lenders’ models consider income, employment, and education, among other factors. So, if you have a thin credit file, you may still be able to apply.

How much can you borrow with a signature loan?

Loan amounts vary widely, depending on the lender and your qualifications. Community lenders and credit unions typically offer lower loan limits compared to larger online platforms.

How long does it take to receive funds from a signature loan?

The timing depends on your lender and how quickly you provide the required documentation. Anywhere from same-day funding to a few days is typical across the personal loan industry, but lenders will often provide a funding window in writing.

What should you do if your signature loan application is declined?

Read your decline notice to learn the specific reason why you were declined. Then, take steps to address that reason before you reapply. It can also help to request a smaller loan amount if your income or current debts were an issue.