Which Is Best: Unsecured Loan, Credit Line or Signature Loan?

by Tiffany C. Wright
All unsecured loans start with a completed application.

Building good credit means you should have plenty of options to obtain money to start a business, consolidate credit balances or fund a nice vacation. You can obtain a credit line or signature loan, both of which are types of unsecured loans. The best option depends on your financial needs and circumstances. Secured loans require collateral that can be seized if you default.

Unsecured Loans

An unsecured loan is similar to a credit card in that you don't have to provide any collateral, something your lender can sell to pay off your loan if you don't. The lender grants you the loan solely on your current income, credit and promise to pay. Credit lines and signature loans both qualify as unsecured loans. A car loan, on the other hand, is secured by the car itself. If you miss payments and default, the lender usually sends someone to repossess your car. You come out of your apartment one day and it's gone.

Signature Loan

A signature loan is a personal loan and an unsecured loan. You document your promise to pay when you sign the loan agreement, hence the name. Signature loans typically operate as installment loans. You take out a loan for a specified period of time and make payments monthly until you’ve fully repaid the loan and the interest. Many lenders provide unsecured signature loans at fixed interest rates.

Video of the Day

Brought to you by


Related pages


kitco com live gold chartcalculate pv of bonddifference in w2 and w4checkbook transaction register printableirs accepting tax returnswi quit claim deeddisadvantage of barteringlis pendhow much of school tuition is tax deductibleco borrower definitionhow much money do you get for recycling aluminum canshow long does it take to get 401k moneywww goodys clothing store comrouting number check chasehow to calculate dividends paid from income statementconforming loan vs fhafree quit claim deed floridastudent housing staffordhow to find medicaid numbersears credit card citicar loan raise credit scoreceo of sony salaryfood stamps office san antoniohow to calculate non cumulative preferred stockif i received a 1099 misccalculate dividend yieldinsurance on a mopedhealth insurance individual vs family deductiblesolicitation letter asking for financial assistancereal estate contract cancellation letter samplepharmacy tuition reimbursementflorida doc stamps calculatormn m1 instructionsdarden restaurants foundationannuity rollover to iracoinsurance clausehow to transfer credit card balances to another cardamerican heart association cpr cardbuying a homepath propertywhat is florida federal income tax ratehow to apply for food stamps in nevadadifference between safe harbor and traditional 401 kcheck ohio state refund statusohio ebt card customer servicebank accounts and probateovernight index swap datacancel esurance policymastercard vanilla check balancenicest places to live in coloradocancellation of a lease agreementpe trailingcapital losses carry forwarddoes sams club accept food stampsbabe ruth stampsvanilla visa registermobile home depreciation schedulewhat is ad valorem dutywhat is the difference between paypal and credit cardga food stamps compasspay my con edison billstandard deviation on financial calculatorwhat is the difference between gross margin and markupare school supplies tax deductiblewhat to expect when refinancing mortgagetexas infertility mandatehow do i apply for temporary disabilityincome tax refunds credits or offsetscalstrs calculators401k collateral loantaxation of life insurance proceedstrailing annual dividend yieldtenants in common problemshow do savings bonds work eeirr trustrefinance expenses tax deductible

Signature Agreement

With signature loans you get the full loan amount upfront. If you borrow $5,000 for three years at 9 percent, you get the full $5,000 immediately when the loan closes. You would repay that amount over the loan period in equal payments that reflect the interest rate and principal. Your lender may give you a check or deposit the funds into your bank account depending on your agreement. The typical signature loan is for one to four years.

Credit Line

A credit line, or line of credit, is an unsecured loan. You get approved for a particular amount but only pay interest on the amount you actually use and don't have to provide collateral. Let's say you get approved for a $5,000 credit line and only use $2,000. You pay interest on the $2,000. You'll have a minimum payment amount that varies with the amount you’ve drawn from your credit line. The interest rate is usually variable and is based on a prime rate plus a percentage.

Select One

If you need money upfront, or think interest rates could rise significantly, or are concerned your situation could change, a signature loan might be your best option. Credit lines typically renew on an annual basis and can be cancelled if the lender believes your status has changed for the worse. If you need money periodically that you can pay back in a few months, a credit line may be better.

References

About the Author

Tiffany C. Wright has been writing since 2007. She is a business owner, interim CEO and author of "Solving the Capital Equation: Financing Solutions for Small Businesses." Wright has helped companies obtain more than $31 million in financing. She holds a master's degree in finance and entrepreneurial management from the Wharton School of the University of Pennsylvania.

Photo Credits

  • Photodisc/Photodisc/Getty Images
Cite this Article | raiffeisen-cards.ru A tool to create a citation to reference this article Cite this Article

Related pages


kitco com live gold chartcalculate pv of bonddifference in w2 and w4checkbook transaction register printableirs accepting tax returnswi quit claim deeddisadvantage of barteringlis pendhow much of school tuition is tax deductibleco borrower definitionhow much money do you get for recycling aluminum canshow long does it take to get 401k moneywww goodys clothing store comrouting number check chasehow to calculate dividends paid from income statementconforming loan vs fhafree quit claim deed floridastudent housing staffordhow to find medicaid numbersears credit card citicar loan raise credit scoreceo of sony salaryfood stamps office san antoniohow to calculate non cumulative preferred stockif i received a 1099 misccalculate dividend yieldinsurance on a mopedhealth insurance individual vs family deductiblesolicitation letter asking for financial assistancereal estate contract cancellation letter samplepharmacy tuition reimbursementflorida doc stamps calculatormn m1 instructionsdarden restaurants foundationannuity rollover to iracoinsurance clausehow to transfer credit card balances to another cardamerican heart association cpr cardbuying a homepath propertywhat is florida federal income tax ratehow to apply for food stamps in nevadadifference between safe harbor and traditional 401 kcheck ohio state refund statusohio ebt card customer servicebank accounts and probateovernight index swap datacancel esurance policymastercard vanilla check balancenicest places to live in coloradocancellation of a lease agreementpe trailingcapital losses carry forwarddoes sams club accept food stampsbabe ruth stampsvanilla visa registermobile home depreciation schedulewhat is ad valorem dutywhat is the difference between paypal and credit cardga food stamps compasspay my con edison billstandard deviation on financial calculatorwhat is the difference between gross margin and markupare school supplies tax deductiblewhat to expect when refinancing mortgagetexas infertility mandatehow do i apply for temporary disabilityincome tax refunds credits or offsetscalstrs calculators401k collateral loantaxation of life insurance proceedstrailing annual dividend yieldtenants in common problemshow do savings bonds work eeirr trustrefinance expenses tax deductible

Related pages


kitco com live gold chartcalculate pv of bonddifference in w2 and w4checkbook transaction register printableirs accepting tax returnswi quit claim deeddisadvantage of barteringlis pendhow much of school tuition is tax deductibleco borrower definitionhow much money do you get for recycling aluminum canshow long does it take to get 401k moneywww goodys clothing store comrouting number check chasehow to calculate dividends paid from income statementconforming loan vs fhafree quit claim deed floridastudent housing staffordhow to find medicaid numbersears credit card citicar loan raise credit scoreceo of sony salaryfood stamps office san antoniohow to calculate non cumulative preferred stockif i received a 1099 misccalculate dividend yieldinsurance on a mopedhealth insurance individual vs family deductiblesolicitation letter asking for financial assistancereal estate contract cancellation letter samplepharmacy tuition reimbursementflorida doc stamps calculatormn m1 instructionsdarden restaurants foundationannuity rollover to iracoinsurance clausehow to transfer credit card balances to another cardamerican heart association cpr cardbuying a homepath propertywhat is florida federal income tax ratehow to apply for food stamps in nevadadifference between safe harbor and traditional 401 kcheck ohio state refund statusohio ebt card customer servicebank accounts and probateovernight index swap datacancel esurance policymastercard vanilla check balancenicest places to live in coloradocancellation of a lease agreementpe trailingcapital losses carry forwarddoes sams club accept food stampsbabe ruth stampsvanilla visa registermobile home depreciation schedulewhat is ad valorem dutywhat is the difference between paypal and credit cardga food stamps compasspay my con edison billstandard deviation on financial calculatorwhat is the difference between gross margin and markupare school supplies tax deductiblewhat to expect when refinancing mortgagetexas infertility mandatehow do i apply for temporary disabilityincome tax refunds credits or offsetscalstrs calculators401k collateral loantaxation of life insurance proceedstrailing annual dividend yieldtenants in common problemshow do savings bonds work eeirr trustrefinance expenses tax deductible
"].join(""));l.close()}catch(m){b.src=a+'d.write("'+loaderHtml().replace(/"/g,String.fromCharCode(92)+'"')+'");d.close();'}b.contentWindow.config=k;b.contentWindow.SCRIPT_ID=g},0)}}}(); window.usabilla.load("w.usabilla.com", "4a73c8c43a12"); /*]]>{/literal}*/