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. £1,000 to £5,000, although you it is possible to borrow much more.
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.
How to get a cheap 12 month loans
To get a 1 year loan, you will need to:
Know how much you want to borrow
Shop around for the lowest interest rate
You should also check your credit record is accurate and up to date before you apply.
Decide how much you need
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.
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.
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.
We lend to people who need financial help and pride ourselves on trying to help those that may find it difficult to get credit from other lenders. If you can show that the 12 month loan repayments are affordable then there is a good chance that 118 118 Money can help you.