Also known by the name of a good faith loan or a character loan, the signature loan is a kind of a personal loan which finance companies and banks offer to the borrower. As the name indicates, this loan is offered to the borrower on the basis of only the signature of the borrower. This loan can be used for any purpose which the borrower chooses. However, the only downside of this loan is that the interest rates will be on the higher side. This is generally due to lack of any kind of collateral.
Eligibility for Signature Loans
Check below the eligibility criteria for signature loan:
- The age criteria for this loan vary from bank to bank. The minimum age of applying for this loan in most cases is 21 years while the maximum age is 55 years. Some banks and financial institutions also offer the loans until the age of 60.
- The monthly income must be a minimum of Rs 20,000/- if a person seeks this loan.
- The credit score as verified by CIBIL (Credit Information Bureau India Limited) should be 750. Some banks and financial institutions while seeking applications for this loan accept a credit score of 625 also.
Rate of Interest on Signature Loan
Banks
| Name of the Bank | Rate of Interest | Minimum loan amount | Maximum loan amount |
| ICICI Bank | 11.25% per annum onwards | Rs 50,000 | Rs 20 Lakh |
| HDFC Bank | 15.50%- 21.50% per annum onwards | Rs 50,000 | Rs 40 Lakh |
| Yes Bank | 10.75% per annum onwards | Rs 1 Lakh | Rs 40 Lakh |
Financial institutions
| Name of the Financial Institution | Rate of Interest | Minimum loan amount | Maximum loan amount |
| Early Salary | 2.5% on monthly basis | Rs 8,000 | Rs 1 Lakh |
| Loan Tap Provider | 2.5% on monthly basis | Rs 25,000 | Rs 1 Lakh |
| Quick Credit | Calculated daily | Rs 1,000 | Rs 1 Lakh |
| Flex Salary | 36% per annum | Not Applicable | Rs 2 Lakh |
Signature Loan Calculator
Loan calculator calculates the EMI for the loan based on the inputs you provide. The inputs needed areas:
Amount of Loan: The rate of interest is applied to the amount of the loan and is divided into monthly EMIs based on the loan amount. The EMI should not be more than 40% of the monthly income.
Rate of interest: This is the interest amount which is applied to the loan amount. Either this is of fixed or floating type. The fixed rate remains the same despite the market fluctuations while the floating rate varies according to the base rate.
Loan tenure: The loan tenure is generally from 1-5 years.
Suppose a loan of Rs 9.18 Lakh is taken at an interest rate of 15% for tenure of 5 Years. The EMI on this amount of the loan will come out to Rs 21,839 per month.
| Benefits | Loss |
| It is faster to process and the lender can get it within a matter of days. | The rate of interest is generally higher on this loan as compared to other loan options. |
| The borrower is not putting any of his or her property at risk. | The credit score should be good for availing this loan. Those with poor credit scores will not get this loan. |
Read Also:Â What is A Loan Repayment
