An Easy-to-Follow Guide to 12 Month Loans


Never have loans been used at the scale they are in this day and age. Thanks to wide-scale urbanization, there exists an ever-increasing need to finance your various expenses. These expenses are typically educational, medical, and a significant asset like property. Fortunately, there are a variety of loans at your disposal.

What are 12-month loans?

There are different kinds of loans for different needs. You have loans for short-term and long-term expenses. 12-month loans are unsecured loans that you can avail for a one year period. Since 12-month loans are unsecured loans, you do not have to pledge collateral.

Why go for 12-month Loans?

There are a bunch of reasons why you should consider opting for 12-month loans. Here are a few:


You can consider a bank loan to be a feasible option depending on you whether you have an adequate credit score or not. You may get a flexible repayment schedule.

Helps boost your Credit Score

Applying for 12-month loans is one of the best ways to build and boost your credit score in the UK. You will have to ensure you repay your installments in timely fashion if you want your credit score to go up.

Helps clear previous debt

On the off-chance that you are already collecting debt on a high-interest loan for a house or a car, getting rid of your debt can be tedious. Fortunately, 12-month loans can save you by allowing you to opt for a lower interest rate loan instead of having to make repayments out of your pocket.

Removes the risk of putting your assets on the line

Considering how 12-month loans are unsecured loans, you may apply them without having to pledge collateral, which is not the case with secured loans. Secured loans need you to put your assets on the line, such as your house or your car.

The Role of Interest

Interest refers to the cost of borrowing a loan. When you borrow 12-month loans, you can expect to be charged interest over the tenure of the loan. Keep in mind that if you have extra money, putting it in the bank can fetch you interest. The bank can borrow your money at a stipulated interest rate and pay you every year for it.

Another thing to keep in mind is that you will have to pay a higher rate of interest on a 12-month loan than you would on a 12-month deposit. Banks make their primary profits from loans like this. This surge in interest is essential for the government as they can use it to prevent inflation.

How do I qualify for 12-month Loans?

If you borrow 12-month loans, you are essentially borrowing small amounts of money and repaying them within a year. Another term for these loans is Payday loans. There are some criteria you have to meet to ensure you qualify for these loans:

  • Firstly, you need to prove that you have a stable source of income. Lenders set minimum income thresholds that you have to meet if you want to qualify.
  • You can apply for these loans if you are aged between 21 and 60. However, this rule does not apply to all lenders.
  • Apart from a stable source of income, you need to prove that you have a solid and steady employment history and that you are a resident of the UK. Additionally, you should have earned a salary for at least two years and worked for your current organization for a minimum of 12 months.

Best Lenders of 12-month Loans

Now that you know what the requirements are, here are a few lenders worth checking out:

Tesco Bank

Tesco Bank provides loans with a repayment break of a maximum of two months. Tesco understands the need to ensure that you settle other payments, which is why they give you this buffer. This two-month buffer can help take the pressure off to repay the loan immediately. If you choose to make early repayments, you may have to pay an early settlement charge.

Sainsbury’s Bank

Sainsbury’s bank allows you to borrow a principal amount of somewhere between £1,000 and £40,000 and repay your loan over up to 7 years. This lender provides 12-month loans with loan repayment conditions that tend to vary with every borrower. You will have to verify your credit history, after which they will offer the loan at an interest rate between 2.9% and 24.9% APR. Keep in mind that this interest rate is fixed for the entire tenure of the loan.


HSBC is known the world over as a reputable bank. You can expect HSBC to ensure the current account holders have their money sent to their accounts when they sign the loans. If you are not an account holder, you can expect the money to reach you within three working days. You may repay the 12-month loan all at once or in installments. You will have to send a written notice, informing them of the same. After verification, the bank will notify you of the loan repayment amount that you need to make.

There you have it – lenders that you can look up if you are looking for 12-month loans. If you do not want to take the risk of spending money out of your pocket to fend off a previous loan or any other major expense, 12-month loans are definitely your best shot.