Poor credit scores can hinder the process of acquiring a loan as lenders usually perceive applicants with low credit scores as a financial risk. That may not be the problem anymore as there are loans that do not require you to have a good credit history or credit score.
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What are 12 Month Loans?
An unsecured loan that can be paid back within a year is called 12 months loans, they are also known as payday loans. These are personal loans that are paid out against your paycheque. The EMI’s are automatically debited from the borrower’s salary account. They can be of great help as they aid an individual in getting funds to cover their financial needs and it must be paid back within the span of 12 months or a year and it is the main feature that distinguishes it from other kinds of short term loans that are provided by a variety of marketplace lenders.
For example, if you were to borrow 400 pounds. In order to clear this debt, you will have to pay £56 each month for the next one year or 12 months as they are the type of loans, where lenders typically allow people to borrow a sum of money and divide it into 12 repayments for the span of 12 months. By making use of small loans, borrowers can ensure monthly payments on time. The borrowers need not struggle to keep up with monthly payments this is because the loan amount is relatively less. Small loans like these are always a good choice for anyone to budget anything.
What are the Features of 12 Month Loans?
Here are a few features that make the 12 month loans quite unique.
- The maximum time frame is always 1 year and no more
- This is a type of a short term loan, which means you have to pay back the borrowed money when you get your salary next
- One can avail these loans without any hassles online
- Disbursal of 12 month loans are extremely quick. There are chances you receiving the money on the same day, that you applied for the loan.
- A good credit score is not a requirement for this loan. Which means people with poor or no credit scores can also avail these loans.
- 12 month loans are mainly characterized by low loan amounts and high-interest rates.
- You have to 18 years or above to be eligible for the loan
- A steady income is also a requirement for availing of the 12 month loan.

What are the Benefits of Availing 12 Month Loans?
There are a lot of benefits that the 12 month loans bring along with them. Listed below are a few benefits of availing 12 month loans
- These loans help in addressing the need for immediate finances.
- The application process for 12 month loans is easy and non-problematic. Typically while applying online the documentation required for it is minimal.
- Having poor credit score is not a criterion for availing these loans, hence people with poor credit loans can also avail these loans.
- Unlike other loans, there is no requirement for collateral either.
- The payout time of 12 month loans is as fast as one day from the day of application
- There is a lot of flexibility when it comes to paying back the borrowed sum. The money can be directly sent from your salary account, ECS facility or even post-dated cheques
What is the Eligibility for 12 Month Loans?
Even though poor credit scores are not a requirement to avail the 12 month loans, there are other criteria to be met by anyone applying for a 12 month loan
- The applicant should be employed and have a steady source of income.
- You or any applicant is expected to meet the monthly salary requirements stated by the lender.
- Should be above the age of 18 years.
- Having a good credit score isn’t mandatory but definitely helps in easing the process of acquiring a loan.
- There is no requirement for any kind of collateral.
- Typically lenders will not ask you to get a guarantor.
Varying Factors
Approaching a bank for a 12 month loan, you will notice, the interest that is being charged is higher as compared to the Bank of England repo rate. This is only done to account for the risk involved for the lenders and financial institutions in lending you the required money.
There are other factors that influence the 12 month loan interest rate and they may be different for different people and one of the vital factors being the credit score. In simpler terms, if you have good credit scores then the interest rate charged will be low.
There are a few other factors influencing the interest rate, apart from your credit score:
- Having a good loan repayment history often works in the favor of applicants who are looking for the 12 month loan approval.
- The strong presence of defaults in credit profiles can lead the lenders to charge high-interest rates
- If you or any other applicant is employed in a big organization or a hugely reputed firm then the interest rate charged on the amount will be less.
Given that there are loans available for people with poor credit scores and history, it does not mean you can rush into it. There is always a catch that you should be aware of, it should be an informed decision.
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