There are lots of reasons you might need a loan — home repairs, educational expenses, a vehicle purchase, or debt consolidation, to name just a few. But what can you do if you need a loan but keep getting declined? In this article, we’ll look at the reasons you may be unable to get a loan, places you can apply for a loan where you’re more likely to be approved, and additional alternatives for getting extra money when you need it.
In This Article
- Credit Unions
- Pawn Shops
- Credit Cards
- Borrowing from Friends or Family
Reasons You May Be Getting Denied
It can be very frustrating and upsetting when you’ve tried to secure a loan but you keep getting denied. If you need a loan but have been refused everywhere you’ve applied for traditional financing, the first thing you should do is understand why you’ve been unable to get a loan.
Not sure what the problem is? Check out your credit report through all three credit reporting agencies: TransUnion, Equifax, and Experian. You’re entitled to a free copy of your credit report from all three credit reporting bureaus annually through AnnualCreditReport.com, the only authorized website for free credit reports. You can also request your free credit report by contacting them at (877) 322-8228.
Here are the three most common reasons why you may be denied a loan:
1. Poor Credit Score
The most common reason for being denied a loan is a low credit score. Banks and traditional financing programs use your credit score to determine the risk in lending you money and the chances that you’ll repay your loan in a timely manner. A poor credit score often indicates that your repayment history is not good, which means there’s a high risk that you won’t repay your loan. In general, a credit score of 700 and above is considered good, although you can certainly qualify for a loan with a lower credit score. Learn more about credit scores through Experian.
If you’ve been turned down for loans because of bad credit, you’ll want to take steps to improve your credit score while you’re searching for alternative financing. Some things you can do to increase your credit score include:
- Don’t apply for more traditional financing or credit programs for a while. Each time your credit record is pulled for an application to any program that uses credit for financing decisions, your credit score goes down by a few points.
- Make sure to pay all your bills on time — from car payments to rent to credit cards to utility bills. Late or missed payments are often reported to one or more of the credit reporting agencies, hurting your credit score in the process.
2. Little to No Credit History
Another common reason that you may not be able to qualify for a loan is a lack of credit. If you have little to no credit history, traditional financing programs are reluctant to approve a loan because there won’t be enough information to determine if you’re a good credit risk.
3. Insufficient Income and/or Excessive Debt
One more consideration that goes into loan decisions is your debt-to-income ratio (your monthly debt payments divided by your pre-tax monthly income).
A higher debt-to-income ratio means that you may have difficulty paying back your loans. Learn more about debt-to-income ratios, including how to calculate your debt-to-income ratio, through the Consumer Financial Protection Bureau.
Alternative Ways to Get a Loan
If you live in a state where payday loans, title loans, and cash advance installment loans are not available, or you’d like an alternative to cash advance places, there are still some ways you may be able to get a loan with poor credit or no credit.
Most credit unions have less stringent loan requirements than traditional banks. If you’re a member of a credit union, consider talking to a loan officer at your branch. They’re typically willing to work with you and find a way to get you the money you need or help you build your credit score relatively quickly if you don’t qualify for a loan.
If you don’t belong to a credit union, consider opening an account at your nearest available branch. There are many credit unions where anyone can become a member, or where the only membership qualifications are living and/or working in the geographical area covered by the credit union. Once you’ve joined a credit union, a representative can help you work toward getting approved for a loan.
Most people think of pawn shops as places to sell unwanted or unused items for cash. However, pawn shops actually deal in collateral loans. When you sell something to a pawn shop, it’s considered a loan transaction where your loan is paid with the item you’re using for collateral.
This means you can use any valuable items you have to get a loan in cash from a pawn shop. You can then pay back the loan and be able to get your item back. If you have high-dollar items such as fine jewelry, guitars, electronic equipment, or brand name power tools, you may qualify for a pawn shop loan.
Many pawn shops also offer title loans, which are loans against the value of your vehicle. In some cases, you may be able to keep your vehicle while you’re paying off the loan (although the pawn shop may demand the vehicle as payment if you miss payments). In other cases, the pawn shop may take possession of your vehicle until you pay off the title loan.
To apply for a pawn shop loan, simply head to your nearest pawn shop with the items you’d like to use for collateral. Wondering how much you may be able to get with a pawn shop loan? See our article: What Do Pawn Shops Buy? for more information, including the price ranges you can expect for your items.
If you have less-than-ideal credit, you may be able to qualify for credit cards designed specifically for you. These credits cards often come with lower credit limits and higher interest rates, but they can be a great way to begin building your credit and establishing a history of on-time payments. Many of these credit cards will also raise your credit limit as you begin building a credit history. Secured credit cards are another option if you have poor or no credit. These cards require you to pay a deposit equal to your credit limit. The company holds onto your deposit and uses it only if you fail to make the required payments on the card.
Take a look at our article, Instant Credit Card Approval and Use (Even Online)? 15 Cards for You, for some ideas of cards to apply for.
Borrowing from Friends or Family
If you’re completely unable to qualify for any type of loan or credit, you may consider borrowing money from friends or family members. This can become a personal and emotional situation, so you may want to take steps to protect both yourself and the person you’re borrowing money from.
The best way to do this is to write out a simple contract stating how much you’re borrowing and how it will be paid back — whether you’ll be making weekly or monthly payments or paying the amount back in full at a later date. Both you and the person you’re borrowing from should sign the contract and make sure each of you has a copy.
If you’re concerned about potential legal action, you can have your repayment contract notarized. Learn more about notarizing documents, including where you can get this done, in our article: Where Can I Get Something Notarized?
Getting a Loan from Cash Advance Stores
Cash advance stores are one possible alternative to traditional loans if you’ve been turned down for a loan everywhere. Generally, cash advance stores use your income rather than your credit score as a basis for loan approval, so even if you have bad credit or no credit, you’ll usually be approved.
Most cash advance stores offer a few different types of loans, which may include:
- Payday loans (short-term advances against your paycheck)
- Installment loans
- Personal loans
- Title loans (loans that use your vehicle as collateral)
- Flex loans (line of credit loan that allows you to get cash advances)
Head to a cash advance store with caution, and only as a last resort — cash advance stores charge much higher interest rates than traditional financing. For most loans from cash advance places, interest rates usually average around 400% annual percentage rate (APR) or more. APRs are usually regulated by state law, and in the most permissive states, APRs can be as high as 800% on payday loans. Because of cash advance stores’ reputation for trapping customers in debt, a few states have outlawed the practice entirely.
However, this doesn’t mean you’ll have to pay back 400% of what you borrow. The APR is based on the interest you would pay if the loan term was for a full year, but cash advance loan terms are usually just 14-30 days for payday loans. A typical interest rate for this term would be around 17% to 20% at most cash advance places. For example, if you were to borrow $500 for a 30-day term at an interest rate of 17.5%, you’d have to pay back $587.50 total.
Interest racks up on cash advances when you miss a payment. If you can’t pay the loan back after the 14-30 day initial term, your interest can roll over, and next month you’ll pay another 17.5% on that $587.50. To follow our example, if you miss the first month and pay off after two months, you’d pay $690.31. Interest adds up fast, so don’t take a cash advance unless you entirely certain you’ll be able to pay it off and avoid accruing extra interest and extra late fees.
In an effort to protect consumers from getting trapped by cash advance debt, most states set limits on the amount of a cash advance. In most states, the limit is around $500, but some are as low as $300 and some as high as $1,000. For a more in dept explanation of cash advance rules by state, see our article Places like Speedy Cash: 11 Alternative Places to Get Payday Loans and More.
Installment loans, personal loans, and title loans from cash advance stores are paid off over longer terms and typically accrue higher interest payments at the average rate of 400% APR in that time. For example, a loan for $1,000 over a seven-month (210-day) term would end up costing you around $1,600 to pay back. They can often be for higher amounts than cash advances, so if you need more money, look into these types of loans.
If you apply for a loan from a cash advance store, it’s important to make sure that you’ll be able to keep up with the payments and high-interest rate.
The List of Cash Advance Stores That Will Likely Accept You
These cash advance stores offer loans that are typically approved for people with bad credit or no credit. We’ve included the types of loans offered, as well as how to apply and where to find a cash advance store near you.
Note that payday, title, and installment loans from cash advance stores are illegal in the following states: Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and Washington D.C. You can learn more about state laws regarding payday loans at the National Conference of State Legislator’s Payday Lending Statutes page.
1. ACE Cash Express
- Types of loans offered: Payday, installment, title
- Qualification requirements: Must be at least 18 years old with a valid photo ID and social security number; have a checking account that’s been open at least one month; and have a regular source of income. Must have a vehicle for title loans.
- Source: ACE Cash Express Installment Loan Requirements
- How to apply for a loan: Visit the ACE Cash Express website to fill out an online application, or go to your nearest store to apply in person
- Find your nearest ACE Cash Express
2. Advance Financial
- Types of loans offered: Flex loans
- Qualification requirements: Must be at least 18 with a valid photo ID and social security number and have a regular source of income
- Source: Advance Financial Online Loans page and customer service representative
- How to apply for a loan: Create an Advance Financial account to begin your application online, or apply in-store at any location.
- Find your nearest Advance Financial. Note: Advance Financial only has stores in Tennessee. However, online loans are available to residents of AL, KS, ID, MO, TN, UT, and VA.
- Types of loans offered: Cash advance, installment loan, payday loan
- Qualification requirements: Must be at least 18 with a valid photo ID, active email address, and checking account; be a U.S. citizen or permanent resident; and have been employed for at least one month
- Source: CashNetUSA FAQs
- How to apply for a loan: Complete the online CashNetUSA application.
- Visit the CashNetUSA website. Note: CashNetUSA doesn’t have any in-person stores. You can only access CashNetUSA online.
4. Check Into Cash
- Types of loans offered: Payday, installment, title, flex loans
- Qualification requirements: Must be at least 18 (21 in Virginia) with a valid photo ID and social security number; active checking account; and a regular source of income to qualify for most loan types. Must have a vehicle for title loans.
- Source: Check Into Cash Frequently Asked Questions
- How to apply for a loan: Visit the Check Into Cash website to apply online, or apply in-store at any Check Into Cash location
- Find your nearest Check Into Cash
5. Check ’N Go
- Types of loans offered: Payday, installment
- Qualification requirements: Must have a valid photo ID, a verifiable form of income, and an active checking account that allows for direct deposit
- Source: Check ’N Go FAQs
- How to apply for a loan: Create a Check ’N Go account to apply online, or apply in-store at your nearest location
- Find your nearest Check ’N Go
6. Community Financial Service Center (CFSC)
- Types of loans offered: Payday, installment, title
- Qualification requirements: Must have a valid photo ID, a regular source of income, and an active checking account
- Source: Customer service representative
- How to apply for a loan: Visit your nearest CFSC location to apply
- Note: Stores are located only in CA, CO, GA, IL, IN, MA, MO, NM, NY, PA, and WI
- Find your nearest CFSC
7. Money Mart
- Types of loans offered: Payday, installment, cash advance
- Qualification requirements: Must be at least 18 with a valid photo ID, Social Security number, and phone number; active checking account; and a regular source of income
- Source: Money Mart Loan FAQs
- How to apply for a loan: Residents of CA, HI, KS, and LA can apply online by visiting the Money Mart website. Otherwise, apply in-store at your nearest location.
- Note, stores are located only in AK, CA, FL, HI, KS, LA, MO, OK, VA, and WA
- Find your nearest Money Mart
8. Speedy Cash
- Types of loans offered: Payday, installment, title
- Qualification requirements: Must be at least 18 (in most states) with a valid photo ID, active checking account, a working phone number, and proof of regular source of income. Must have a vehicle for title loans.
- Source: Speedy Cash Payday Loan Requirements
- How to apply for a loan: Create a Speedy Cash account to get started with your online application, or apply in-store at your nearest location
- Note, stores are located only in AZ, AL, CA, CO, IL, KS, MO, MS, LA, NV, TN, WA
- Find your nearest Speedy Cash
9. United Check Cashing
- Types of loans offered: Payday
- Qualification requirements: Must be at least 18 years old with a valid photo ID, active checking account, and regular source of income
- Source: Customer service representative
- How to apply for a loan: Visit your nearest participating United Check Cashing to apply
- Note: Loans are only available at select CO, DE, FL, and OH stores
- Find your nearest United Check Cashing
If you need money now and have been unable to qualify for a traditional loan, there are several alternatives to choose from, even if you have poor credit or no credit. Most people are able to qualify for a loan from a cash advance store, although you’ll need to be aware of the very high-interest rates these places charge.
You may also be able to get a loan through a credit union, through a pawn shop using items you own as collateral, or by getting a credit card with low credit requirements. Finally, you may be able to borrow money from friends or family if you can’t get a loan anywhere else.