Signature Loan: Your Key To Holiday Shopping
Do you still have holiday shopping to do? In a perfect world you would have a money tree in your backyard, but if you don’t have a money tree, you may need some financial help to complete your shopping. If you do find yourself in need of some extra cash this holiday season, a signature loan is a great option, especially if you already have an outstanding balance on your credit-card.
Investopedia defines a signature loan as, “A type of personal loan offered by a financial institution that uses only the borrower’s signature and promise to pay as collateral.”
There are five key benefits to applying for a signature loan in addition to helping you place those special gifts under the tree.
- You Will Know How Much Your Payments Are. A signature loan allows you to borrow a fixed amount of money. Once you are approved for a signature loan your interest rate and repayments terms are established and do not change throughout the course of the loan. This is what we call a fixed payment. Your payment will be the same every month, which lets
you create a monthly budget with the repayment amount in consideration. - You Only Spend What You Borrow. With a signature loan you are only able to spend up to the amount of the loan. This can help you to not overspend for any last minute shopping trips. It also helps you create a spending budget, so you know exactly how much you can spend on each loved one. Plus, you are not required to spend the entire amount of the loan. If you have left over funds, you can always apply them to your payments.
- Signature Loans Are Installment Credit. This simply means that your loan has a fixed number of payments. According to Score Info, one of the factors that determine your credit score is the amount owed on revolving accounts. You will be evaluated on how much you owe on your revolving account. Since a signature loan is classified as an installment loan it will not add to your revolving debt.
- You Have A Good Idea As To When Your Debt Will Be Paid Off.Signature loans are usually a form of short-term lending. Since your signature loan will have a fixed term, you will know the exact date that you will have it paid off. Having a fixed payment and term helps you get your debt paid off and in the past.
- It Can Improve Your Credit Score.
A personal loan can improve your credit score if you make your payments on time. By improving your credit score you will have access to better rates on future loans.
Final Thoughts
Keep in mind that a signature loan is still a form of debt. Make sure that you will be able to make your monthly payments in full and on time in conjunction with your other financial responsibilities. Late payments will have a negative effect on your credit score.
If you feel that a signature loan is the right option to help you finish your holiday shopping, Launch CU offers signature loans with great low rates and flexible terms. If you are going big this year, “Better Buy A Bigger Tree.” Now through December 31, 2015 any Launch CU member who gets a loan funded, $10,000 or more, can defer payments for 60 days and be entered to win a $500 Visa Gift Card.* For complete contest rules, click here.*
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