Legal Definitions - signature loan

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.