Loans are a part of life. You need loans to get a house, a car, and in many cases other things as well. So, if you need loans, then what are your options when your loan gets denied?

The answer to that question really depends on why your loan gets denied and what you want a loan for. It is a complicated answer, and one that can't satisfactorily be answered with out specifics. However, the first thing you should do when your loan gets denied is to ask for specifics of why. You are entitled to this information, so don't let them tell you otherwise, and do not settle for generic answers. If they say your credit score is not high enough, find out the number it has to be. If they say your debt to income ratio is too high, find out what it has to be, etc. This will help you take your next step, and figure out your next option. For example, if your debt to income ratio is too high, your next step is to eliminate some of your debt, start paying things down.

Lenders are required by a federal law, The Equal Credit Opportunity Act, to tell you in writing when you've been turned down for credit. They must include the specific reasons why you were denied credit (or information on how to obtain those reasons); the name and address of the credit reporting agency that supplied your credit report to them.
 
If you don't understand the reasons given for turning down your application, ask for more information. Ask, ask, ask, the information you receive may help you improve your credit so you can qualify in the future.

You may be denied credit for various reasons, some of them credit problems, some of them high lender standards. Knowing the reasons helps you know what course of action to take next. For example, if you do not have time to wait to fix the credit problem that is the cause of your loan being denied, then you have a few other options. However, let's take a look at a few things:

Use a credit repair company:
If you are not able to fix your credit yourself, or are just not sure where to start, one option is to use a credit repair company. This is a good option if you only need to get a few points raise in your credit score.

If you choose to use this option, you will need choose your repair company carefully. Some of the so-called "credit repair" companies out there are really just elaborate scams. When you deal with credit, you  use very personal information, and you do not want that information to be in the wrong hands. So, look for a company that has a good rating from the BBB, has official government approval, or something similar.

Repairing your credit is one big option for what to do if your loan gets denied, if you can get your credit up to snuff, you can reapply for a loan, and it should not get denied.

Pay high interest rates:
One option for you if a loan gets denied is to apply for a loan at a different institution. The requirements for one bank will be different from the requirements for another. However, if you are denied a loan somewhere, and get one somewhere else, you can be sure that you will pay high interest rates, and probably only qualify for low amounts. This is not always the best option because you may pay more in interest then what something is actually worth.

Use other sources for finding a loan:
Traditional lenders are not your only option for getting a loan. If you apply for a loan with a traditional lender, and it gets denied, then another option is to try for a different kind of loan. Some of these loan types are better than others, but they are all options to consider should a traditional loan be denied.

Rich grandparents:
This is an option most people would rather not explore, but it is also an option a lot of people use. If you can't qualify for a loan, you can always ask a rich family member, or even a poor family member that has enough money for your loan to lend it to you. This can be done legally, you can have an attorney draw up the loan documents, or a financial professional. You can set it up like a traditional loan, where you pay interest in installments over a set term, or you can leave it open ended and casual, where the borrower pays back the lender whenever they can, and either does not pay interest, or pays a lower interest then they would pay at a bank.

The terms of this kind of loan are really going to be up to the borrower and the lender. Legally, if someone loans you money they need to note it, because they would be subject to paying taxes on interest, etc.

Investors:
Depending on what you want the loan for, it is possible to get private investors to fund your project. For example, if you want a loan to buy a car, this is not an option you can use, but if you want a loan to start a small business, you may be able to find an investor that sees your ideas as legitimate enough to put their own capital up. They may have much more lenient terms for whether or not they will give you a loan. The terms and conditions on this kind of loan will once again depend on the investor, but should be done legally for tax reasons and otherwise.

Friends:
This is much like the option of going to family, though in most cases, a loan from a friend would be more structured and specific. Most people advise friends not to lend each other money as it can get in the way of a friendship. Our advice is to only borrow money from friends for things that are tangible so that if you can not pay them back, you can give them the item.

Co-sign with someone:
Many times when a lender will not give you a loan it is because they do not find your credit worthiness up to snuff. However, if someone whose credit does meet their standard will vouch for you, and put their own credit on the line for you, you may be able to get a loan. So, if you do not qualify on your own, consider asking someone you trust who has good credit to co-sign on the loan with you. This is an excellent option for big ticket purchases such as a car or a home.

Pay day loans:
This is one of the most popular options for when a small loan gets denied. Obviously this is not a legitimate option for when you get denied for a home loan. However, it is still a popular loan denial option. Typically these loans are for two weeks. These are good options for when your loan gets denied because in many cases there are no credit checks. If you have bad credit or no credit your chances of getting approved are significantly higher than going through a regular lender. Of course you will pay for this approval in higher rates, and less loan ability. Usually you can only borrow between $200 -1500 dollars. This is one of your best options if you do not have credit.

Basically, to qualify for this kind of loan you need the following:

• You must be eighteen years old
• You must have a regular job or a steady source of income.
• Drivers license or ID
• Social Security Number
• Checking Account Number
• Personal reference
• Home phone
• Email

Each payday loan lender has different requirements, but these are basics.


Summary:

No matter what option you choose, just remember, if your loan is turned down because of a poor credit report, you are entitled to a free copy of that report. You must request it within 60 days, so don't wait to order it. Once you get it, it is important to read your report carefully to make sure it is accurate and complete. Check it for errors, start the process of fixing any you find, and then ask your lender to reevaluate your loan once you have something in writing from the credit bureaus, just remember, this could take several months.

Finally, persistence is often key when it comes to getting a loan approved, you can try again with a different lender or different company. All lenders have different approval standards. Just don't apply for more than four or five loans in a six month period as this can further damage bad credit. You have to show lenders you are worthy of their loans.