Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Aug 31, 2012

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Not all prospective borrowers can qualify for unsecured personal loans. Prospective borrowers can speak to as many lender representatives as they wish, research information to their hearts’ content, and look up all the unsecured personal lending quotes they want, yet that will still not necessarily make them eligible for unsecured financing.

Fortunately, in the event that a borrower is unable to qualify, there are several other options worth pursuing.

A borrower should try to find a co-signer for their unsecured personal loan. Co-signers are important optional participants in various lending processes. When a borrower has a co-signer with a high credit score and an excellent credit history, that borrower may become less risky in the eyes of lenders. Once a co-signer is involved in the lending process, borrowers with previously poor standing may end up qualifying for loans they applied for. This is because co-signers share the payment responsibility for the debt that the borrower agrees to take from the lender.

However, that responsibility is not something a co-signer should take lightly. In the event that a borrower fails to make payments, a co-signer will be held responsible for the remaining balance.

If a borrower is unable to find a co-signer then he or she should consider other sources of money.

One option would be to borrow money from friends and family. A second option would be to spend less on recreational activities and to use stricter budgeting which would allow for more savings. A third option would be to use credit cards or savings in place of unsecured personal loans.

Borrowers who do not qualify for unsecured financing may also try to obtain a secured personal loan. This requires prospective borrowers to submit valuable assets to their potential lenders as collateral. Collateral secures the value of lent money and reduces a lender’s risk. By offering valuable assets—such homes or car titles— as collateral, lenders are less vulnerable to complete profit loss in the event that borrowers fail to repay their loans. Of course, in order to qualify for secured personal loans, prospective borrowers must have valuable assets that would cover the amount of the money they wish to borrow. Not all prospective borrowers have valuable assets that can be used as collateral.

It is important for borrowers to weigh their options for both secured and unsecured personal loans. By self-evaluating their own assets, tendency towards risk, and budgets, prospective borrowers can make an informed decision about how much debt they wish to take on.