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A signature loan is a type of loan that lenders can make without requiring any collateral. They’ll typically approve the loan based upon a person’s financials and credit scores — plus their signature on loan papers. This is also called an unsecured personal loan, a signature personal loan, good faith loan, or character loan.

Read on to learn more about signature loans, how they compare to other types of personal loans, and their pros and cons.

What Are Signature Loans?

Signature loans are unsecured personal loans. Unlike secured personal loans, a signature loan doesn’t require you to pledge collateral — an asset of value like a house or a bank account — that the lender can seize should you fail to repay the loan. Signature loans are approved based solely on the creditworthiness of the applicant.

Because the loan is unsecured, signature loans often come with higher interest rates than secured loans like car loans and mortgages. However, the interest rates are typically lower than credit cards.

You can use a signature loan for virtually any purpose, such as consolidating high-interest debts, a major purchase, or a medical emergency.


💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

How Do Signature Loans Work?

A signature loan works in the same way as an unsecured personal loan. These loans are offered by many banks, credit unions, and online lenders. When you apply for a signature loan, the lender will consider a number of factors, such as your credit history, income, and credit score, to determine whether you qualify for the loan and what the rate and terms will be.

If you’re approved for a signature loan, the lender will issue you a lump sum of cash, which you will then repay (plus interest) in monthly installments over a set term, often 24 to 60 months.

A Quick Look at Secured Loans

A secured loan requires you to pledge collateral to secure the debt. For a car loan, it’s typically the vehicle that is being purchased with the loan proceeds. For a mortgage loan, it’s typically the house being financed or refinanced. If the borrower defaults on a secured loan, the lender seizes the collateral to recoup their losses.

Some personal loans are secured, while others are unsecured. Secured personal loans could have a savings account put up as collateral, as just one example. This strategy could be risky for the borrower, though, because it may tie up money meant to be used for living expenses or set aside for emergency circumstances.

A Quick Look at Unsecured Loans

A lender does not require any collateral on a signature personal loan, which is an unsecured personal loan. So should you default on the loan, you won’t lose an asset of value (though your credit will likely take a hit). However, an unsecured loan may be harder to qualify for and have a higher interest rate than a secured loan, due to the increased risk to the lender.

Common Reasons to Get a Personal Loan

Personal loans are versatile, with the borrower typically able to use the funds for any personal, family, or household purposes. Some common personal loan uses are:

•   Credit card debt consolidation Interest rates on credit cards can be high — the average annual percentage rate (APR) is now 24.66%. So you might use a lower-interest personal loan to combine credit card balances into one loan.

•   Home improvement projects Depending upon the size of the remodeling project, costs can range from hundreds of dollars to thousands — even tens of thousands. A personal loan can give the borrower the opportunity to conveniently pay for home repairs and upgrades.

•   Medical bills Unexpected medical expenses can quickly add up, putting a real dent in someone’s budget. Paying for them with a personal loan can often make more sense than using a high-interest credit card for that purpose.

•   Weddings From engagement rings to ceremonies and receptions, weddings can get expensive — and that doesn’t even include the honeymoon. Couples may decide to look into signature personal loans as a way to cover their expenses.

•   Moving expenses From moving supplies to renting a truck or hiring movers, the dollars can rack up, with a personal loan being one way to pay for the expenses.

Pros and Cons of Signature Loans

If you need loan funds fast, you don’t have collateral to pledge, or don’t want to tie up assets as collateral, a signature loan might be the right choice for you. Here are some of the pros and cons of signature loans:

Pros of Signature Loans

•   Funds disbursement is typically quick

•   There is no collateral requirement

•   Generally a wide range of loan amounts available

Cons of Signature Loans

•   Lenders may see unsecured signature loans as riskier than collateralized personal loans, so interest rates may be higher than secured loans.

•   Some lenders’ minimum loan amounts may be higher than some people need.

•   Short-term signature loans can be payday loans, which typically have extremely high interest rates and fees.

Pros of Signature Loans	Cons of Signature Loans
Typically, funds are disbursed quickly, sometimes within a few days.	Payday loans may be disguised as typical signature loans.
A wide range of loan amounts is typically available.	Some lenders may not be the best fit for applicants seeking small loan amounts.
There is no collateral requirement.	Lenders may charge higher interest rates on unsecured signature loans than secured loans if they perceive them as risker.

Signature Loans vs Personal Loans

A signature loan is a type of personal loan, specifically an unsecured personal loan. Each is approved based on the applicant’s creditworthiness, without collateral being a consideration. A secured personal loan, however, is not the same thing as a signature loan, since collateral is required to back up this type of loan.

As with other types of personal loans, online signature loan lenders are widely available, making it easy to compare lenders. Once approved for a signature loan, funds may be disbursed quickly, sometimes in just a few days. There are few restrictions on the use of the signature loan funds.

Signature Loans vs Revolving Credit

Signature loans are typically installment loans, with a lump sum loan amount repaid in equal installments over a set amount of time. Revolving credit, like a credit card or line of credit, works differently.

With revolving credit, you have access to a credit limit. You can then borrow money when you want to (up to your limit), pay it back over time, and borrow again as needed. You only pay interest on the amount you actually borrow, not the full credit limit.

Signature Loans	Revolving Credit
Funds disbursed as a lump sum	Credit limit that can be accessed as needed
Payments are equal over a set amount of time	Payments may vary each billing period
If more funds are needed, a new loan must be applied for	Funds can be used over and over again
Has a payment end date	Loan is revolving

What Are Signature Loans Commonly Used For?

There are few restrictions on the use of signature loan funds. One common use of a signature loan is to consolidate other, high-interest debt with the goal of either getting a lower interest rate or having a fixed payment end date.

Signature loan funds are also commonly used to pay for wedding expenses, medical expenses, or home renovation or repairs.

Advantages and Disadvantages of Signature Loans Online

Signature personal loans are widely available online and can be good choices for people who don’t mind not having a physical bank branch to drive to for transactions.

Advantages of signature loans online include:

•   Competitive rates Online lenders can often offer competitive rates because they don’t have the expenses involved in maintaining physical branches.

•   Convenience It can often be quick and easy to apply online (no driving, no appointments needed), and online lenders often offer streamlined processes which may result in quicker approval times.

•   Different criteria Some online lenders might focus more significantly on a borrower’s cash flow and employment history, perhaps allowing for a bit more wiggle room on credit scores than a traditional bank would be willing to give.

•   Additional benefits Online lenders may also offer more perks to their customers than a traditional bank offers.

There are, however, disadvantages to working with an online lender vs. a bank you have an established relationship with. Some to consider:

•   No history As an established customer of a traditional bank, you may qualify for a reduced interest rate, depending on your creditworthiness.

•   Potential scams Not all online “lenders” are legit so you’ll want to be wary of unsolicited offers, and only enter financial information on official, secure websites. It’s also a good idea to research the lender’s reputation before giving them your personal information.

•   No face-to-face interaction Unlike working with a brick-and-mortar financial institution, you likely won’t have the chance to meet with an online lender in person. If this is something you value and desire in a lender, the online loan option may not be for you.

•   Potential spam If you contact a number of online lenders directly to compare rates, you can end up on their email contact list, even if you don’t choose to work with them.

💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

Application and Approval Processes

Similar to an unsecured personal loan, a signature loan’s application and approval process is generally simple and straightforward.

Things to Look Out for When Getting a Signature Loan

It’s a good idea to review your credit report before shopping around for a loan. A free annual credit report can be requested from each of the three major credit reporting agencies. If there are errors or inaccuracies on your credit report, you can try to correct them before any lenders start the loan qualification process.

Credit reports don’t include a person’s credit score . However, you may be able to access that information through your bank, credit card issuer, or a reliable website at no charge.

When you’re satisfied that your credit report is accurate, you may want to compare lenders and consider getting prequalified. Many lenders will do a soft credit check at that point, which will not affect your credit score. You’ll be able to compare interest rates and terms from multiple lenders to find the one that works best for your unique financial situation.

Getting prequalified can give you a good sense of how much might be available to borrow, what the interest rate would likely be, and how that translates into a monthly payment.

Before applying, it’s important to know how much you need to borrow. You generally want to choose an amount that would cover the expenses at hand while trying to avoid borrowing more than necessary. Interest will be charged on the amount borrowed, not only the amount used.

When comparing prequalification quotes from different lenders, it’s a good idea to find out if there are any hidden fees, such as origination fees, late fees, or prepayment fees.

Typical Signature Loan Requirements

Each lender has unique application and approval requirements but may commonly ask for the applicant’s name, proof of address, photo ID, and proof of employment and income. After the application has been submitted, a lender will conduct a hard credit check to review the applicant’s credit report.

Besides checking credit scores, lenders like to see steady employment and enough income to meet expenses, including this new loan. Sometimes, having a cosigner or co-borrower might improve the chances of loan approval or help to secure a more favorable interest rate.

Getting a Personal Loan With SoFi

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Are signature loans easy to get?

You typically need a good credit score to get a signature loan, since lenders want to be confident that you will repay the money.

Signature loans are unsecured, meaning you don’t have to pledge an asset of value (like a home or bank account) that the lender can seize should you fail to repay the loan. This raises risk for the lender. As a result, signature loans can sometimes be harder to get than secured loans like car loans.

Do you need a down payment for a signature loan?

No down payment is necessary for a signature loan.

What is the maximum that can be borrowed with a signature loan?

Lending limits will vary by lender, but you can often get as much as $100,000 in funding with a signature loan.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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If you’re applying to business school and want to earn an MBA, you likely understand the importance of doing well on the Graduate Management Admission Test, or GMAT™. Strong scores may help you get into your dream program.

The three digit number that qualifies as a good score can depend on how competitive the program you’re applying to is. In general, a 660 or higher is considered a good GMAT score, but in some cases, over 700 may be needed.

In addition, schools take a look at your unique background when evaluating your application to help them build a well-rounded student body. As a result, what qualifies as a strong score varies by school and by applicant. Take a closer look here: Learn more about the GMAT, scores, and applying to business school.

How Is The GMAT Scored?

So if you’re deciding whether getting an MBA is worth it, you’re probably curious what score you’d need to be accepted.

Before considering what is a good GMAT score, know that the possible range is from 200 to 800. On average, test takers score 582, and half of all GMAT takers score between 400 and 660, according to the Graduate Management Admission Council™ (GMAC), which administers the exam.

Generally speaking, a good GMAT score is in the 660 to 800 range. For more competitive programs, you may want to aim for a score over 700. What is the highest GMAT score — a perfect 800 — is difficult to achieve, but can potentially counteract other weak points in a student’s application.

After taking the GMAT, students will receive a score report, which will feature five different numbers:

•   Total score

•   Quantitative score

•   Verbal score

•   Integrated reasoning score

•   Analytical writing assessment.

Of those five the three that are most important are usually the total, quantitative, and verbal scores.

Here’s a breakdown of how each is calculated, according to The Princeton Review®:

Section	Score Range	How the Score Is Calculated
Total	200 to 800	This score is reported in increments of 10 and is calculated based on performance in the verbal and quantitative reasoning sections.
Quantitative	0 to 60	Based on the number of questions you answered, how many you answered correctly, and how difficult the questions you got right are. Reported in increments of one.
Verbal	0 to 60	Based on the number of questions you answered, how many you answered correctly, and how difficult the questions you got right are. Reported in increments of one.
Integrated Reasoning	1 to 8	Based on the number of questions you answered correctly, and reported in increments of one.
Analytical Writing Assessment	0 to 6	Based on an average of two scores assigned by two readers, and reported in increments of 0.5 points.

💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

How to Figure Out Your GMAT Range

As mentioned above, the full GMAT range goes from 200 to 800. Though a score of 700 or more puts you in more competitive standing, what functions as a good score is relative. In other words, a good score for you is the one that helps you get into the program of your choice and advance your career goals.

•   Students interested in attending a top B-school will generally need a high score. For example, 2025 incoming full-time MBA students at Stanford University had average GMAT scores of 738.

•   However, if you’re interested in a less competitive program, you may be just fine with a score in the 500 to 600 range.

Here’s another way to look at it: What is a high GMAT score for someone applying to a less competitive B-school may be seen as low to someone applying to a top-tier program.

Before taking the GMAT, think about your career goals. What type of program do you want to attend to achieve your business objectives? Does the MBA program’s affordability factor into your decision-making process? Do you have the potential time and money required to train up to earn a truly lofty GMAT score?

•   For example, someone aiming to be CEO of a Fortune 500 company, may want to attend a top-rated school.

•   Those planning to lead a smaller business or even start their own enterprise might pursue a less competitive program.

To figure out just how competitive your scores need to be, research the programs you’re interested in. Some schools will post the average GMAT score of their students, which can help you see what you likely need.

It may also help to reach out to school admissions, alumni, and current students to find out what factors have a big impact on admissions.

Recommended: How Soon Can You Refinance Student Loans?

Researching Average Scores

When thinking about test scores, it’s possible to get too narrowly focused on that one number. Schools are looking at a student’s complete application to determine whether they’ll be a good fit.

However, you can certainly get a better idea of the types of students your target schools are admitting by researching average GMAT scores.

The easiest way to do this is to log on to the school’s MBA class profile web page, which may give you all sorts of information. You’ll likely find everything from the average GMAT test score to the number of applicants versus the number of enrolled students to demographic information.

Keep this in mind: The total score isn’t the only thing that schools look at, and the weight given to each of the five scoring sections on the test may vary from school to school.

For example, an MBA program with a focus in data science might zero in on your quantitative score more than other programs. Reach out to school admissions offices to find out if they give special weight to a particular score section.

Knowing the average scores of your target program can help you understand how competitive your score needs to be.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

How to Prepare for the GMAT

As you prepare for the GMAT — and to achieve your target score — it can be a smart move to give yourself a good amount of time to study. You may want to begin the process as much as six months in advance of taking the test. Common test prep advice suggests that it may take 100 to 120 hours or more of studying and taking practice tests to adequately prepare.

Keep in mind, you may be in school or working at the same time, researching graduate school scholarships, and living daily life. You don’t want to be stuck cramming for this test.

Set up a study schedule. Start by setting up a calendar on which you schedule study dates and times to take practice tests. Resist the urge to procrastinate.

Review the material for each section of the test at a time. You can access free practice tests online that give you an insight into the format and the types of questions you’ll be asked. Don’t get overwhelmed by trying to digest all sections at once.

Practice tests can help you identify areas that may require extra studying. They can also help you practice pacing. The GMAT is a timed exam, and time management is critical to finishing.

Recommended: Tips to Lower Your Student Loan Payments

Unofficial Scores: To Accept or Cancel?

When you complete your test, you’ll typically be shown your unofficial score right away and given a chance to accept it or cancel. You’ll only have two minutes to make the decision once you’re finished. You may, for example, cancel your score if you don’t meet a preset target.

It can also help to familiarize yourself with the application policy at your target(s) school. Some schools prefer to see every GMAT score, while others only request the top score.

Even if you accept your score (you’ll get your official score in about 20 days), you still have 72 hours to cancel it online if you change your mind. What’s more, if you cancel your score, you can study areas where you were weak and retake the test after 16 days.

If you feel as if you could use guidance as you navigate the test-taking and application process, some aspiring business students choose to hire an MBA application consultant.

What Business Schools Look At In Addition to the GMAT

A GMAT score that is on par with a program’s enrolled students can help demonstrate you are prepared for the academic rigors of the program. What’s a good GMAT score will, as noted above, vary depending on the school you want to attend.

That said, business schools look at other factors as well, including:

•   Gender

•   Demographics

•   Your resume.

In particular, they may be looking for signals that students have what it takes to become good managers and business leaders. They may examine previous accomplishments, quantifiable achievements, and progression in a chosen career path.

But what about paying for grad school? That can impact which schools you may decide to apply to and which offer you accept. There are a variety of programs, from in-person to online, as well as courses of study designed for people who are already out in the work world and holding down a job.

As you consider all this, you will likely want to pay attention to the price tag. Especially if you will be in school full-time and not earning any money, it’s wise to consider the true cost of an MBA degree.

As you think about how to pay for an MBA, you may want to investigate any scholarships and grants you might qualify for.

The Takeaway

When applying to a business school, it’s critical to understand average GMAT scores, so you have a target to help you focus your studies and prepare for the test. The average score is currently 582, but what’s a good GMAT score may be 660 or even 700 or above, depending on the program to which you are applying.

If you are accepted to a business school program, you may need to take out student loans to pay for your education. After graduating, some students may refinance their student loans, which can help them secure lower payments, but if you refinance for an extended term, you may pay more interest over the life of the loan. Also, refinancing federal loans means they’ll no longer qualify for federal benefits or protections, so it may not always make sense to refinance.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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