These are short term loans that repay over a 12 month period through fixed monthly instalments. These can be useful for borrowing a small amount of money e.g. £3,000 to £7,000, although you it is possible to borrow much more.

What can you use a 1 year loan for

These loans can be used at any point, whether you need to pay for an unexpected expense, or if you foresee a period where you might need some extra cash to cover regular expenses

A 12 month loan can also be used for planned expenses such as making home improvements or taking a holiday. But it's important that before your take out any loan, you have a plan in place to repay it.

Is it better to get a credit card instead?

Whether you opt for a credit card or loan depends on how much money you need to borrow. A loan may be a better option if you want to borrow a large amount of money and can afford to pay the fixed monthly payments.

Typically, the more you borrow, the lower the loan’s APR. APRs can be as high as 30% for loans of £1,000 but as low as 3% if you’re borrowing more than £7,000.

Credit cards are better suited for short term borrowing for everyday spending, as they tend to have higher interest rates than loans.

How to get cheap 12 month loans

To get a 1 year loan, you will need to:

  1. Know how much you want to borrow

  2. Shop around for the lowest interest rate

You should also check your credit record is accurate and up to date before you apply.

Read more about how to apply for a loan

Decide how much you need to borrow

You could borrow between £1,000 and £25,000 with a 12 month loan, but you will need to show that you can afford the monthly payments.

It's important to only borrow an amount you need, because you'll have repay the whole amount with interest.

Look for the lowest rate

The interest rate is the main factor that dictates how much your loan will cost, so when you know how much you want to borrow, shop around to find the cheapest rate.


This comparison shows the representative APR of each loan. However, the rate can vary for different loan amounts.

The representative APR includes all of the standard costs of getting a loan, so check you are getting the lowest advertised rate you can find before you apply.

Check that you can afford the loan repayments

Paying back your loan over just 12 months may keep the overall cost down but it will also make your monthly payments higher.

Use our loan repayment calculator to see how much you would have to pay back each month if you borrowed over a 12 month period.

Once you know how much the monthly payments could be draw up a budget to check if you can afford them.

If you are unsure if a 12 month loan is the right option, but want to avoid a longer term loan, you could consider a 0% money transfer credit card or overdraft instead.

Should you get a credit card, loan or overdraft?

Can you get a 12 month loan with bad credit

If you've had problems with credit before, there are lenders who may still consider offering a 12 month loan to you.

These lenders, rather than basing their decision solely on your credit score, take into account your overall financial circumstances and your affordability.

That said, if your application is accepted, it's likely that you'll pay a higher interest rate, and that you may not be able to borrow the amount you wanted.