12 Month loans – The what, The when, And the How

12 Month loans - The what, The when, And the How
12 Month loans - The what, The when, And the How. Image source: Supplied

What are 12-month loans? 

A loan is important because it enables you to spend money on things that you would not be able to do otherwise. People apply for loans for a variety of reasons. Some loans take care of short-term expenses while other loans are availed for property, education or medical expenses. As the name suggests, 12-Month Loans are unsecured personal loans that can be availed for a period of one year. Unsecured loans do not require you to pledge collateral. 

Why are they Important to us?

Banks offer us money at a particular interest rate. This money can be used to finance anything from down-payments on your car to a new house. There are several reasons as to why it would benefit you to go to a bank for 12-month loans.

Cheap and affordable

Depending on whether you have a good credit score or not, a bank loan can actually be a viable source of money. Customers can request a flexible repayment schedule.

Helps build your credit score

Availing 12-month bank loans makes for one of the easiest methods to improve your credit score in the UK. If the installments are paid regularly, and on time, your credit score rating is bound to improve. 

Refinancing earlier debt 

In case you are collecting debt on a high-interest loan, such as a car loan, ensure you clear that debt as quickly as you can. Sometimes you may not have the capital to pay for the loan out of your pocket. Opting for a personal loan in such a situation at a lower interest rate may do you some good.

They don’t require you to risk your assets 

People can take 12-month loans without putting their personal assets on the line. Secured loans require you to agree to give up your house, your car or other valuable items as collateral in case you are not able to repay the principal loan amount.

Image source: Supplied

Banks that offer 12-month Loans and their Criteria

The idea behind a 12-month loan is that you borrow small sums of money and pay them back within a year. These loans are also referred to as payday loans. This is because people tend to have to wait until they get their salary to pay off the loan.

Payday loans can be given out without strict regulations, and in some cases, the credit can be given out in a single day. There are some criteria that an applicant must fulfill before applying for these loans

  • The applicant must have a steady salary or be self-employed. In either case, their monthly income cannot be lower than the minimum threshold set by the lender.
  • The age of the applicant needs to be between 21 years and 60 years. This may be subject to the lender’s policies. 
  • The borrower must have a steady employment history and should be able to prove that they stay in the UK. They should have earned a salary for 2 years or more and should have worked with the current employer for a minimum of 12 months.

It is important to note that the requirements for a 12-month loan vary with different banks. Hence, a prospective borrower must check all details before signing an agreement with a bank.

Most major UK banks offer 12-month loans. Listed below are some of the offers they provide.

Tesco Bank

Tesco offers loans with a payment break of up to 2 months. This exists because they understand that when you first take your loan, there might be other bills that also need to be paid off, thereby relieving you of the pressure to pay off the loan immediately. They do allow you to pay off your loans earlier, but you will have to pay an early settlement charge.

M&S Bank:

To apply for an M&S Loan, customers must have a yearly income of at least £10,000. They are also required to be a UK resident and over 18 years of age. Customers who cannot meet the standard lending criteria may apply for a loan at a different Annual Percentage Rate (APR). The amount that is borrowed also has an impact on the rate offered on your 12-month loan.

Sainsbury’s Bank:

The principal loan amount could be from £1,000 to £40,000 and can be paid over a period of 1 to 7 years. Sainsbury’s loan conditions on 12-month loans vary with each customer. After verifying your credit history, the bank will offer you an interest rate within the range of 2.9% to 24.9% APR. This is a fixed interest rate and will remain unchanged throughout the tenure of the loan. 


With Barclays Bank, you will be able to take out a loan of any amount between £1,000 and £50,000. Loans from Barclays Bank have a fixed interest rate, which means that the amount you pay back every month will stay the same.


HSBC extends Personal Loans to account holders and non-account holders alike. Current account holders will have the money credited to their account once the loan has been signed. For non-account holders the money will be credited in 3 working days. The loan can be repaid in full or in installments by submitting a written notice or by informing the bank via telephone. The bank will notify you of the amount needed to repay the loan within the next 28 days.

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