Which Types of Lenders Offer 12 Month Loans?

12 month loans are loans which you pay back over the course of one year. Usually you would pay your loan back in instalments on a monthly basis. This means that you’d pay 12 payments to the lender in order to clear your debt with them. These payments are normally the same amount (or at least very close to the same amount) each month, and include the loan amount plus any fees and interest. In simple terms, borrowing £1000 over one year with an APR (annual percentage rate – this includes all of the interest and fees you’d be expected to pay over the course of a year, expressed as a percentage of the loan amount) of 20%, means that you’d owe a full amount of £1200. When you split this into 12 monthly payments, you would need to repay £100 per month. Of course, this is a very simplified version, and different lenders will all have different interest amounts that you’re expected to pay, so your payments over a year could be much different to this, particularly if you’ve chosen a different amount to borrow altogether!

There are many different lenders out there who can offer loans with terms of one year. As a first port of call, your bank may be able to help you. Banks can often offer the lowest rates, but as they are more risk averse, they could turn down more people due to stricter lending criteria. If your credit history is not brilliant, then you could be forced to look at more alternative lenders in order to get the money you need. This is not a bad thing – many lenders who are considered alternative can offer products that the banks, building societies and supermarkets simply won’t lend out to many people. Here’s a rundown of the different lenders who could help you.

Guarantor Lenders

Guarantor loans require a second person to come on board with you, who will agree to pay your loan instalments if you cannot. Of course, it’s preferable that your guarantor doesn't step in at all, as that is not the point. The point is that they’re there as a safety net should something go wrong. You’ll be checked at the application stage to ensure that you’re able to afford the loan you want in order to protect everyone involved.

Logbook Lenders

Logbook loans use the value of your car as collateral, and will lend you up to 50% of the value as long as you own the vehicle outright. The APR can be pretty high with loans like this and if you don’t repay in full and on time then your vehicle could be taken from you.

Instalment Lenders

Instalment loans have higher APRs than guarantor loans, but they don’t require a guarantor in order to pay the money out to you. The point of these loans is that they offer a viable alternative to payday loans, in the fact that you don’t have to pay the full amount off within a month.