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.

Top Tips to Keeping Up with Loan Instalments

If you’re short of cash or are looking to make a large purchase (like a new car or home improvements) then taking out a loan could prove the perfect solution to your problems. Prior to getting the loan it is likely that the lender will carry out a variety of checks to ensure that you are eligible and can comfortably afford the instalments. Providing the lender is satisfied that you meet their criteria then they’ll pay the loan out and you are then in full control of making the repayments.

While at first everything may be plain sailing, and you’re making the repayments without any problems, this can soon be thrown off by the arrival of an unexpected expense. For example, your boiler may break down or you may be hit by a hefty mobile phone bill and before you know it you've paid these and can no longer afford the repayments of you loan. Failing to pay the instalments on a loan can lead to real financial problems. It’s likely that you’ll be hit with late payment fees and charges, your credit history may also be affected if the missed payment is reported to credit reference agencies which could have an impact on your ability to get approved for credit in the future.

Throughout this article we are going to discuss how you can ensure that you keep up with your loan instalments and are never faced with the consequences of missed payments.

1. Set up a direct debit for the day after your payday

Setting up a direct debit very close to your payday is a great way to ensure that you always have sufficient funds in your account when the repayments are due. A direct debit is a payment that is automatically deducted from your account on a weekly/monthly basis, having one in place basically means that no effort is required on your part to make the payment meaning the chances of forgetting to make it is zero.

2. Create a monthly budget

If you haven’t already done so then creating a monthly budget is a great way of putting your finances in order and giving you an overview of where all your money goes. Despite what many think, budgets are in fact very simply to create and really don’t take that much time. By giving yourself a framework for your monthly spend you can also highlight any areas where you may be overspending and take the relevant action.

3. Reduce your outgoings and adjust your budget

If you’re finding that every month you are facing a struggle to make ends meet then it’s likely that your outgoings are too high. This is quite an easy problem to fix; simply take a look at your budget and highlight any areas where you feel that you may be spending too much. The first thing you should look at is you non-essential subscription; things like SKY TV, gym memberships or magazine subscriptions. Ask yourself, am I really getting the most out of these subscriptions or could I get by without them? More often than not these subscriptions simply don’t warrant their cost; cancelling them could leave you £50 to £100 better off each month – depending on how many you've got.

Once you have fully paid off the loan then you may find that there’s room in your budget to afford these non-essential subscriptions once again. However for the time being you’ll probably have to sacrifice these luxuries in the name of repaying your loan instalments.

Slash Credit Card Payments with a Tactical Balance Transfer

There is more than a little irony surrounding the fact that we Britons are absolutely up to our eyeballs in consumer debt, even after all of the trouble that our credit addiction caused us back in 2008. Undoubtedly the credit crunch frightened the mainstream lenders into becoming much more cautious about dishing out credit to anybody but those with the whitest of white credit scores, but we consumers have still managed to saddle ourselves with record levels of consumer debt, which exceeds that of even pre-crash levels. The difference now is that a majority of us are simply carrying a greater degree of higher-interest debt, particularly in the form of credit cards, which has made climbing out of debt a much more slippery and tricky business.

The credit card shuffle

Many savvy consumers who are saddled with credit card debt have become well versed in the art of regularly transferring their debt from card to card, in a little dance which has been coined the credit card shuffle. By transferring your existing credit card debt to a new one, via a balance transfer, it is possible to drastically speed up the repayment of your debts, seeing as potentially all of your repayments will be paid into clearing your debt directly, rather than the interest. For those with smaller levels of debt, a low interest or 0% interest balance transfer card could allow you to quickly clear your debt and get back into the black, whilst those with much larger, long-term credit card debts will be able to spend the hundreds that they may have been spending on interest payments each month on chipping away at their debt instead.

Balance transfer options will vary between cards and applicants

There are a number of different options available to consumers, although access to balance transfer credit cards may vary depending on the credit score, salary, and debt level of the applicant. Some balance transfer offers will allow consumers to switch over their debt with no transfer fees, whilst for others you will incur a charge of around 2% of the debt to be transferred for example. It will also vary between cards how long your interest free period lasts for, with some cards offering the consumer a 0% interest 6 month free period whilst others may offer up to 18 months. It should be mentioned however that it is imperative that you make at least the minimum monthly payments on your new credit card because if you miss a payment, you will lose your 0% interest deal and get a charge for good measure.

Be careful not to mistime your moves!

If used carefully, credit cards can be a fantastic method of borrowing money at very low interest or even 0% interest, with no fees and no fuss. However if you get it wrong, you could quickly find yourself with burned fingers and carrying a lot of expensive debt around your neck. As with any form of dance, the credit card shuffle is one which will require you to pay attention to the small details. Be sure to make a note on your calendar of which month your interest free balance transfer deal is set to end, and set your repayment plans around this accordingly.

Avoiding Fees When Shopping Online

Online shopping is something that most of us do, but as some of us will attest to, it's not without its risks and pitfalls. Shopping on the world wide web remains one of the most convenient ways of getting what you want and getting a good deal at the same time, although until the technology exists to allow us to print out what we've purchased on a 3D printer, we still have to wait until the postman (or post woman!) has delivered the item to us. Of course, digital purchases such as films, eBooks and music are available for you to enjoy instantly.

Although shopping online can be one of the cheapest ways to buy what you want and need, there are still small ways in which it could sting your bank account for more than you realise. Shopping around and comparing prices on the world wide web is much easier than doing so in real life. Not only can you visit numerous shops at once but you can also enjoy the perks of comparison websites and voucher code sites which can instantly allow you to identify the cheapest possible deal. It's not the cost of the items you want to buy that can add on the hidden fees and charges but the other costs involved that you need to watch out for.

Payment Method Fees

One of the more common areas where people get stung for higher amounts than they anticipated when shopping online is additional costs involved in how you pay. You would think that any payment method would simply be able to be taken without issue, as everything is online and no special equipment is required such as a card reader, for instance. Although things done online can be very efficient and cheap for the company involved, sometimes charges are levied by the payment provider to the business. This in turn is often passed onto the consumer. You may have experienced this by having to pay an extra £1.50 for using a credit card or PayPal. One way to avoid this is to have a number of payment options at your disposal and always stay below budget just in case.

Postage Fees

Paying to have your item delivered is something we all expect to have to do, but some retailers online will offer free postage, so be sure to take this into account when comparing prices. Some online shops will give you an option to pick different postage options. If you're happy to wait a little longer for your item(s) then choosing the cheapest option could really help to keep the costs low.

Booking Fees

When buying tickets online for things like concerts and travel you could find yourself caught out by a booking fee or two. Some sites will have higher booking fees than others, so do your research before committing to buy anything just in case you could save the money. For instance, when buying train tickets, thetrainline.com issues a £1.50 booking fee, but sites like redspottedhanky.com do not.

Tips on Avoiding Credit Card Fees

It goes without saying that credit cards are an absolute essential part of our consumer spending toolbox, and you would be hard pressed to find a wallet anywhere in the UK which doesn’t contain at least one. With statistics showing that there are over 30 million UK consumers with one or more credit cards, and that over 2.2 billion purchases were made to the value of £140 billion, it is without question that they play an important role in both the British economy and society.

However as great a method of payment as credit cards are, they can also become extremely expensive if interest and fees are allowed to build up. You can avoid getting yourself into a financial pickle by carefully managing the use of your credit card and employing a little common sense.

Pay your credit card off in full each month or pay more than the minimum monthly payment

This is rather obvious but the easiest way of avoiding large interest repayments or late fees on your credit cards is to repay your credit card debt in full each and every month. If you are on a low income and your credit card balance is far too high to make this feasible, at the very least try to pay more than the minimum monthly payments. After all it is well documented how paying minimum payments alone on your credit card will see you pay far more than the original value of your debt, and it will take you years to pay off what you owe.

Look out for alternative credit cards with a 0% balance transfer offer

If you have credit card debt which is costing you an arm and a leg in interest payments each month, it might be worth looking at switching your balance over to another credit card with a 6-12 month interest free period on balance transfers. Banks and lenders are always on the lookout for new customers and you could take advantage of this to start chipping away at your credit card debts, minus the interest.

Pay on time and don’t go over your credit limit

As if paying large interest payments alone isn’t enough, there are also a range of fees which your credit card provider will hit you with if you are not careful. If you make a late payment on your credit card or you accidently stray over your credit card limit, there is a very strong chance that you could be hit with a £12 plus fee for each indiscretion. To avoid falling foul of such charges, always be sure to make your minimum monthly payment three working days before the payment due date, and keep a close eye on how much you are spending.

Never withdraw cash from an ATM machine with a credit card. Ever

Last but not least, always avoid drawing money from a cashpoint with your credit card unless you have absolutely no choice. Withdrawing cash from an ATM will see you either pay very high rates of interest on the money that you have withdrawn or you will find yourself paying a considerable fee for the privilege.

Which Fees Should Set Alarm Bells Ringing?

When it comes to getting credit from a credit card provider or from a loan company, you may be asked for certain fees as part of the initial application or paying out process. Some of these are completely normal, and although you can bypass them by going directly to the lender, they’re not illegal. However, some will fall foul to illegal fees which shouldn't be charged, and because there is not enough information out there to educate everyone on their rights when taking out credit, these victims can sometimes not even realise that they have been left out of pocket until it’s too late.

Upfront Fees

When searching for credit through a broker, you may be asked for an upfront ‘loan finder’ fee. This is legal, but they’re only allowed to keep the full amount if they’re successful in finding you a loan. If you've paid an upfront fee to a broker and they haven’t been able to find you a loan, then they're only legally allowed to keep £5 of your money – the rest they have to pay back to you. There are brokers who won’t charge an upfront fee but who will simply add their ‘commission’ onto the loan amount that you take out, so you’ll pay this over the course of your loan term. In most cases, it doesn't affect your payments by very much and you’ll be told the full amount that you’ll have to pay before making any final decisions.

Loan Payment ‘Proof’ Fees

If a lender or broker asks you to pay them the first month’s instalment for a loan to prove that you can, and to confirm your identity then don’t deal with them. This is not usual practice and is often used by fraudsters to con people out of cash. If you haven’t had the loan paid out to you, then don't pay any instalments towards it. There have been cases where people have been duped out of hundreds of pounds because they've sent money to an account they thought was a lender, was told that it didn't work and to send it again, and then the ‘lender’ has disappeared with the cash, leaving the applicant without a loan and a lot of money out of pocket.

Western Union Transfers

If you are asked to transfer money via Western Union to an account to pay for fees or for a loan instalment, then this should set alarm bells ringing. Legitimate lenders and brokers should have a dedicated secure payment system in place. Fraudsters use Western Union because the money that is wired is not usually very traceable, meaning that they can be paid without the risk.

How to Avoid These

Before handing over any personal detail or money to anyone when looking for a line of credit, you should check that the lender or broker is legitimate and that they are registered to trade in the UK. Check that they are registered with the Financial Conduct Authority and search online reviews to see what experiences others had with them.

Avoiding Fees in Everyday Life

Life is expensive – almost everyone has taken steps since the recession hit in 2008 to cut back on their expenses, and some are faring better than others. The problem with budgeting these days, is that things don’t always cost what you think they are going to. Take for example, buying train tickets online. Many ticket sellers will add on a booking fee of around £1.50, which doesn’t look like much on paper, but this extra amount could throw your whole budget off if you’re trying to make the most of every single penny. Little fees (and much larger ones) are part of almost every aspect of life, but it is possible to override them most of the time. Here’s a rundown of the most common fee pitfalls.

Credit Fees

When taking out credit, like a loan for instance, then you could end up paying back much more than what you borrowed plus the interest. This is because some lenders have hidden fees, which can only really be found when you read the small print and the terms and conditions. If you've found a loan through a broker, then it’s likely that you’ll have to pay a loan finder fee, which is usually added to the full amount that you have to pay back. This is not an upfront cost to you, but it does mean that you’ll end up paying more than someone who went to the lender directly. You should also be aware of late payment fees, statement generation fees and early settlement fees.

Payment Fees

When you buy something online, you’d hope that the final price of the item is what you pay. Unfortunately, if you’re paying by credit card, you can often be hit by a card payment fee. These can range from 50 pence all the way up to £4.50 or even a small percentage of your original spend. Some sites will also ask for a fee if you pay via PayPal, which means that entering your debit card details is sometimes the only way you can avoid paying anything on top of what you want. Ensuring that you have a separate current account for online shopping could help you to budget for internet shopping, avoid the payment fees and keep your cash safe should your details be compromised.

Travel Fees

Travel fees can come in many forms. We mentioned the train ticket one above, but there are also other fees which can particularly be found when travelling by air. Saving money by flying with budget airlines is pretty common, but the added fees for baggage allowance, picking your own seat and even using the bathroom when on board can really push the prices up. Make sure you read the small print when booking and if ordering your tickets online, never click the confirm button until you've read everything on the page!

‘Offense’ Fees

Being fined for things like not paying for a parking ticket or leaving your bins out long after rubbish collection day can be easily avoided. Keep mindful of what you’re doing and always keep your paperwork organised.