A 1 year loan can be ideal if you need to borrow a significant sum of money but don't want to be committed to a long term loan over several years.

However, with so many one year loans on the market it's essential to find the cheapest loan to keep your borrowing costs down. We explain how:

How to find the best 12 month unsecured loans

If you need a loan for 12 months making sure you're getting the best deal possible is a must to ensure you pay as little as you can for your borrowing.

The main cost of taking out loans over 12 months is the rate of interest or APR you'll be charged on the loan. As a rule, the lower the APR or interest rate, the cheaper your 1 year loan will be.

The 'headline rate' quoted by most loan lenders is a representative example of what you could pay if you take out the loan. However, the actual rate that you'll be quoted when you apply for a loan is likely to depend on the amount you are looking to borrow and your credit rating.

For this reason it's important that you find the cheapest one year loan for your personal circumstances so you pay less from your borrowing overall.

Before you apply for the cheapest 1 year loans on the market, you need to ensure the loan on offer meets your needs.

How much do you need to borrow?

The best 1 year loan for you will vary depending on the amount of money you want to borrow.

It's often the case that the more you borrow the lower the interest rate, with the best rates generally offered on loans over 7,500; however it's never a good idea to borrow more than you need.

Instead you need to calculate exactly how much you need to borrow and look for the cheapest 1 year loan for that amount.

Do you qualify?

Often the cheapest loans will apply stringent application criteria, meaning that unless you have an impeccable credit history and high regular income you won't qualify for their headline rate. However, even if you don't have a gleaming credit history, you should still be able to get an affordable one year loan.

You simply need to check the application criteria of each loan before you apply, to make sure you tick all the boxes.

If you have a poor credit history, or have defaulted on previous loans or credit cards you may need to consider looking at 12 month loans for bad credit.

Although these loans are more expensive they will consider applications from borrowers with a poor credit record, while other 12 month lenders will simply reject your application.

Can you repay early?

Most small loans over 12 months come with the flexibility to allow you to repay your loan in full early.

However, the cost of repaying early can vary from provider to provider so if you think there's a chance you might want to repay your loan early you need to check exactly how much this might cost.

Weigh up if greater flexibility to repay early is important and in some cases worth paying extra for, or whether you simply want to find the cheapest loan possible and are happy to be tied into repaying over 12 months.

Once you've decided exactly what you need from your 1 year loan, you can compare the loans side by side using our one year loans comparison table to find the best deal.