It is important when considering any financial service that you understand everything presented to you. We are here to help. In this section, we introduce you to the concept of 12 month loans. We examine what they are, who they affect, and what are the considerations when applying for one.
At Moolr, we search the market for loans from £500 to £5000 3. As a guideline, any loan required for £500 and above can be spread over more than 1 month. Anything else is classed as a payday loan. We work with payday loan lenders, and longer-term lenders to boot.
By choosing to spread the cost of your loan, as is the case with 12 month loans, there are pros and cons. Of course, by spreading the cost of borrowing, this means that you are ‘in debt’ for longer.
If you have budgeted your 12 month loan correctly, then this need not be an issue per se. However, sometimes it is a psychological burden, knowing that you have monthly repayments for the next 12 months. This also means that you may end up repaying more in interest, than if you spread your loan over a shorter period.
The major benefit of 12 month loans though, is that it enables you to plan your finances and keep the monthly repayment figure low. Of course, the shorter the period, the higher the monthly repayment, so spreading this over 12 months keeps your monthly amount lower. This means that you can work out all of your income and expenditure, and work out how much you can afford to repay – all thanks to 12 month loans!
Another thing to consider when looking for 12 month loans is your credit score. This manifests itself in what’s known as your credit report. Your credit score shows potential lenders what forms of credit you currently have, and have had, along with any missed or successful payments. The purpose of your credit report is to enable a potential lender to calculate your credit ‘risk’, and therefore, what they are willing to lend you.
In relation to 12 month loans, this means that a bad credit score could limit the length of time you can repay, should the lender deem that there is a higher risk by paying over a longer period of time, such as 12 months.
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At Moolr, we specialise with lenders who deal with those of us with a bad credit history. Therefore, we like to think we provide our customers with a real chance of rebuilding their credit score, by finding a 12 month loan to suit any budget.
By choosing a 12 month loan, you are giving yourself the best chance of rebuilding your credit report, as you are making more payments towards your credit than a 1 month payday loan. Time flies, and once you have completed every monthly payment successfully, this will have a positive footprint on your credit report. This means that should you need further credit in the future, you have a better chance of obtaining it. Please remember though, that missing a payment will also have a negative impact on your credit score.
12 month loans are a useful way to spread the cost of borrowing. They also carry a slightly lower risk to the lender than say, a 24 month loan, as there are fewer repayments to be made, and therefore a lower chance that you will miss one.
Applying through Moolr means that you are under no obligation to commit to our lender’s offer. As we also work with lenders that specialise in 12 month loans for bad credit, then we offer a great chance of rebuilding or enhancing an already good credit score.