The Lowdown on 12-Month Loans

The Lowdown on 12-Month Loans

With the number of expenses people have today, it is not surprising that they are turning to loans to handle them. There are a variety of loan options on the market, including loans for bad credit. 12-month loans are another option.

What are 12-month loans?

Different loans take care of different types of expenses, some short-term, some long-term. 12-Month loans are fundamentally unsecured personal loans that you can avail for one year. You do not have to pledge collateral for unsecured loans.

Why are 12-Month Loans appealing?

Here are a few reasons you should go for 12-month loans:

You can afford them affordable

This is a viable source of funds because it is affordable. Most loans aren’t exactly feasible since they depend on your credit score.

It helps boost your credit score

Applying for 12-month bank loans is one of the best ways to go if you are wondering how to build credit. You need to make timely payments to improve your credit score.

Helps clear previous debt

Chances are you are collecting debt on a high-interest loan, like a car or house loan, which means clearing your debt is no joke. You can opt for a 12-month loan at a lower interest rate instead of having to repay the entire loan out of your pocket.

No need to place your assets on the line

Since 12 month-loans are unsecured loans, you can apply for these loans without pledging collateral. As mentioned, you do not have to place your assets on the line since these loans are unsecured.

What are the criteria to avail 12 Month Loans?

The purpose of borrowing a 12-month loan is that you borrow small amounts of money and repay the entire loan within a year. These loans are also known as Payday loans. You need to meet some criteria to be eligible:

  • You need to have a steady salary or be self-employed. Your monthly income must be at least equal to the lender’s minimum threshold.
  • You need to be aged somewhere between 21 and 60 years. Each lender’s policies vary, so make sure you look them up first.
  • You must have a stable employment history and prove that you live in the UK. You ought to have earned a salary for at least two years and worked for your current employer for a minimum of 12 months.

The minimum requirements for a 12-month loan may vary with each bank or lender, which is why you need to run through all the terms and conditions before you go ahead.

What is interest and its importance?

Interest refers to the cost of borrowing a loan amount. The bank offers you a loan if your credit score is excellent.12-month loans come with an interest rate.

If you have extra money coming in, be sure to put it in the bank. The bank will deduct this money at a specific interest rate on the loan.

You must also remember that the interest rate on a 12-month loan is generally higher than the interest rate on a 12-month deposit, which is how the bank makes a lot of its profits. The Government uses interest as a tool to prevent inflation or help push the economy by encouraging people to borrow money.

Which banks offer 12 Month Loans?

Here are a few banks that offer these loans:

Sainsbury’s Bank

This bank allows you to borrow a principal amount of £1,000 to £40,000 and repay the loan over a period of 1 to 7 years. Sainsbury sanctions 12-month loans with conditions. These conditions vary with each customer. After you verify your credit history, the bank will offer you an interest rate ranging between 2.9% and 24.9% Annual Percentage Rate (APR), which will remain fixed through the tenure.


HSBC ensures the current account holders get their money credited to their accounts after the loan has been signed. For non-account holders, you can expect it to take three working days for the funds to be credited. The 12-month loan may be repaid at once or in instalments. For this, you will have to submit a written notice or call up the bank. The bank will give you the amount that you need to pay, within the next 28 days.

Tesco Bank

Tesco offers borrowers loans with a payment break of up to two months. This is to accommodate other expenses that you may have to take care of. In other words, you do not have too much pressure to clear the loan. You will have to pay them an early settlement charge if you decide to pay early.

M&S Bank

If you want to apply for a 12-month loan at M&S, you need to show that you have a yearly income of a least £10,000. You must also be a UK resident aged at least 18. If you cannot meet these conditions, you might be able to apply for a loan at a different APR. Keep in mind that the amount you borrow will also affect the interest rate on your 12-month loan.


Barclays Bank lets you take out a loan for any amount between £1,000 and £50,000. Loans from Barclays Bank are generally given at a fixed interest rate. You have to make fixed monthly payments.

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