Signature Loans as a Quick Cash Source

When you need money quickly you may turn to all sorts of options to get it. One of those options is to borrow the cash you need in the form of a loan. There are a plethora of different loans available, but which is the best for a quick cash source. A personal signature loan is probably near the top of the list. What makes a personal signature loan a good option and what makes it a bad option as a quick cash source? It's important to understand both so you can make the best decision about your cash needs. Let's examine the pros and cons of personal signature loans and what makes them a good or bad option for a quick cash source.

Pros of Personal Signature Loans

• Signature loans are convenient and easy to obtain. The nice thing about personal signature loans is how convenient they are to obtain. All you have to do is go to your bank, credit union, or lending institution and ask for a personal signature loan. In most cases you won't need to declare what the loan is for, pledge collateral to secure it, or wait days on end to get the cash you need. The approval process is quick. It normally can be approved the day you apply for the personal signature loan or within a couple of business days of turning in your application. Most lenders offer direct deposit to your bank account so the cash is available for immediate use. If you are looking for a quick cash source, personal signature loans are literally that: very quick and very easy.

• Lenders compete for your business. The popularity of personal signature loans is on the rise, and so are the number of lenders offering them. As more lenders offer personal signature loans, the rates, terms, and amount you can qualify for become more and more competitive. You come out the winner because of this. If you don't like the deal one lender is offering, you can always find another with a better deal out there. To add to all the lenders offering good deals on personal signature loans, there are also services that will help you find the best loan for you. For a small fee they will sort through the competition for you and get you the best deal you could possibly find. When the lenders are competing for your business, you win.
• Poor credit is not a problem. Just because you have less than perfect credit doesn't mean you can't qualify for a personal signature loan. There are several different types of personal signature loans available all of which are tailored to fit specific needs. Bad credit secured or unsecured personal loans are available, though the interest rate isn't as good as those that are available for borrowers with good credit. Personal signature loans can also assist you to rebuild your credit, just make sure the lender reports on time payments to the credit bureaus as well as late payments.
• Low to no risk involved for you. One of the great things about personal signature loans is that they are low risk to you. The lender takes on the risk as the only thing they ask for is your signature saying you will repay the loan. Most signature loans are unsecured, which means you don't need to pledge collateral to obtain the loan. That means you aren't putting your home, your life's savings, or your future on the line to obtain cash quickly. The only thing you are risking is your name and your credit score. If you default on the loan, the lender is the one that may take a loss, not you. This makes personal signature loans one of the best options for a quick cash source.
• Use your loan for whatever you choose and payback the loan at your leisure. Unlike a lot of loans available, you do not need to tell your lender what you are using the loan for in order to be approved. This makes personal signature loans very appealing as you can use the money for whatever your cash needs are. You can use it for a dream vacation, a big screen TV, consolidating debt, home improvement, or whatever you need the loan for, and unlike short term or payday loans, the payback period is manageable. The payback period on a personal signature loan is usually 1 to 10 years depending on the amount of the loan. This is a much more convenient amount of time than two weeks or even a month. For a quick cash source, the payback period on this type of loan makes it a great option.

Cons of Personal Signature Loans

1. Higher interest rates than other types of loans. The number one drawback to using personal signature loans as a quick cash source is that interest rates, though competitive, are higher than on other types of loans, such as home equity loans. This is because the lender is assuming most if not all of the risk, so they charge higher interest to offset the risk. If you take out a secured personal signature loan the risk is dropped significantly, and therefore the interest rate will drop as well, but you assume the risk with whatever collateral you pledge to secure the loan. Your interest rate also depends on your credit score, so though a lender may advertise a low interest rate, like 3% which is comparable to a home equity loan, only those with close to perfect credit can actually qualify for the low interest rate. A high interest rate isn't your friend when you need cash quickly as you can end up paying back double what you took out in the loan.
2. Fees and lots of them. A personal signature loan comes with miscellaneous fees. You will typically pay a broker fee, origination fee, payment security fee and loan arrangement fee up front, just to name a few, as part of your loan package, then you will be charged an amortization fees or processing fees every time you make a payment on your loan. The fees can add up to a huge portion of what you pay back the lender not to mention the interest and principal you will be paying as well. On top of all the fees they charge you with the loan, some lenders will also charge you an early payback penalty if you repay the loan before the end of the agreed to term. The early payback penalty can be a percentage of the amount they would have been paid if you had continued on the scheduled payments through the end of the payback period or it can be a set fee, which is usually quite large. What's the use of quick cash if it's going to cost you more than it's worth in the long run?
3. Though a loan can help your credit, it is more likely to hurt. Most lenders will only report your late payments on your personal signature loan to the credit bureaus, so if you don't ask specifically, you're probably wasting your time trying to build or rebuild your credit this way. If you do happen to default on a personal signature loan, it reflects very badly on your credit score. You can go from good credit to very bad credit with just one loan if you default on it. When that happens, your sources for quick cash are limited very quickly. As the number of personal signature loans rise, so do the number of loans that are defaulted on. With the high interest rates and fees, it is very easy for a personal signature loan to become too much for you to handle.

Conclusion

If you have a need for a quick cash source, a personal signature loan can be a good option. It is up to you to weigh the pros against the cons for your particular situation to find if this type of loan is the best source for you. Before you go and take out a personal signature loan, be sure to ask yourself if you really need it, or if there is a way to get the money elsewhere without borrowing it. If what you think you need it for is a frivolous expense then you shouldn't put yourself into debt over it. A personal signature loan is a debt and can be a heavy burden to your financial budget, so be wise when making a decision on your quick cash source.