What Is the Difference Between a Signature Loan and a Short-term Loan?
It’s normal to obtain a loan to buy a house or vehicle. When you take out a loan for a house or car, the lender lets you repay the loan over several years. But what if you need a quick, short loan? In this case, you can apply for either a signature loan or a short-term loan. Signature loans and short-term loans carry certain similar characteristics; neither type of loan requires collateral and they both feature short repayment terms. However, there are key differences between the two.
Obtaining a Loan
Financial institutions, such as banks and credit unions, issue signature loans. You can apply for a loan in-person or submit an application via your bank’s online website. If approved for a signature loan, visit the bank to sign your documents and obtain your funds. Short-term loans, also known as payday loans or cash advances, aren’t issued by banks and credit unions. These loans are available from private loan companies. You can apply for a short-term loan with a local company or submit an online application. Loan companies operate differently from banks. If you submit an online application for a short-term loan, the loan company conducts the entire transaction via the Internet and fax. You supply your information, such as copies of your most recent paycheck stub, bank statement and driver’s license. After verifying your information and receiving your electronic signature, the loan company deposits funds into your bank account.