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For Personal Loans - Part 2

What are your options?
One of three things will happen with any given application:

You'll be offered a reasonable deal, and all will be well.

You'll be offered such a high-interest rate that you have a better chance of winning a fortune in Vegas than paying that loan off.

You'll be turned down. End of story.

Even if you've been turned down, or realized that the lender was offering a deal from the shark tank, you're not out of the game yet. Alternatives are available:

Credit Unions - Applying with your local credit union might be a good option if your bank turns you down. Credit unions are financial institutions, and although they may be similar to banks, you'll find one big difference; credit unions are owned by their members and are nonprofit organizations. They have lower fees than banks and better customer service. You have a better chance of getting approved by a credit union than by a bank.

Peer to Peer Lending - Peer to peer or p2p lending uses an online platform to connect lenders and borrowers, allowing you to contact an individual and borrow directly from that person, rather than going through a financial institution. You simply post a listing for the amount you need and potential lenders will review it. Potential lenders will still screen you, and they will take your score into account, but since P2P lending puts you in direct contact with a human being, the chances of finding an empathetic person are much higher than going through the banking system. You'll also pay lower interest rates than a bank would offer.

Get a Co-Signer - Getting a co-signer will take you further down the road of loan qualification by leaps and bounds. If you have a friend or family member who's willing to be a co-signer for you, great! This person will need to have good credit, though, and they will be taking on all the risk. If you default on your loan, your co-signer is responsible for paying the bill. You don't want to leave anybody in the lurch, so only consider this option if you are sure that you can repay the loan.

Ask Family or Friends - Somebody at home might be willing to lend you money. Having to ask might be a little embarrassing, but it takes strength to admit you need help, so be proud of yourself for doing it. Now, just because it's a family member or close friend, neither of you should be lax. Borrowing money is a serious piece of business, whether it's from a family member or a bank or financial institution. Friend, family, or not--it's a business transaction. Treat it as such. Avoid complications and bitter feeling at all costs. Create a written agreement, include an interest rate, decide on the terms, use collateral, and ensure that everything is clearly and legally documented.

Home Equity - If you're still more comfortable going through your bank, you might have another option, albeit a risky one. If you own property, and you have enough equity in it, you might be able to score a low-interest line of credit that's tax-deductible and has no restrictions on how you spend it. Sounds great, but as already mentioned, there's risk. Taking this course of action will put your property on the line if you end up not being able to repay what you've borrowed. This option is a compelling one since even if your credit score is bad, the interest rate will be relatively low. You should only consider this option if you have a reliable income and your other debts are manageable. You also need to be extremely disciplined about making your payments in full and on time, every time. If you slip up, the consequences can be severe.

Final Word
Shopping around is your most important first step. It's vital that you compare loan options from several financial institutions before you make a decision and sign any paperwork. You want to make sure you're getting the best deal you possibly can, and not falling prey to any predatory practices. If your loan applications are consistently denied, you should start looking through the alternative options listed in this article. The last two methods (borrowing from a family member or friend, or using home equity) should be the last resort. If you gather your intel and make a smart choice, you could well be on the way to securing a personal loan with an interest rate that won't kill your budget. All the above while improving your credit rating. What's not to like?

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