12-month loans are instalment loans aimed at helping you meet big expenses when you are running out of cash. They are way more affordable than payday loans and other small emergency loans because the whole amount of the loan is not paid back once and for all. The loan will be spread over 12 monthly payments, which makes it manageable for you. However, the amount of the loan should be larger too. If it is a paltry sum, you cannot spread money across multiple payments.

The minimum borrowed sum must be at least £1,000. However, in that case, the loan will be settled in two or three months. 12 month loans from a reputed direct lender involve a larger sum that starts from £5,000. Qualifying for a 12-month loan is not easy at all. The payments are to be made within 12 equal instalments, which means a lender is obligated to evaluate your repaying capacity.

Small loans do not involve strict criteria because the whole money is to be settled in a lump sum, usually on your next payday. The scenario is different when it comes to instalment loans. A lender will see if your financial circumstances remain the same throughout the loan term.

Many people think that they are guaranteed loans because a lender can give you a guarantee that your application will be signed off on, but that is just a myth which should be debunked.

There is no kind of thing like a “guaranteed approval”

First off, you need to understand that no lender can guarantee that you will get the nod for your loan application. A loan is processed after a thorough check of your affordability and repaying capacity. Unless you put in the loan application, no affordability checks will be made. This means that a lender cannot assure you that you will get a 12-month instalment loan.

Chances are your credit rating is bad, or your income sources are not sufficient to let you borrow a large sum of money. Of course, these details can be assessed only after you formally submit your application form. On no account can a lender guarantee approval.

Guaranteed acceptance is different from guaranteed approval

Guaranteed acceptance should not be confused with guaranteed approval. Every lender has different criteria for assessing applications. Some lenders offer loans to borrowers with a decent credit rating. They may be willing to accept your application despite a poor credit rating, but there could be the bare minimum score they follow as the criteria for approval. However, some lenders can be more generous. They might be able to accept your application even if you have a very poor credit rating.

Guaranteed acceptance indicates that you will not be discriminated against on the grounds of poor credit ratings. You are absolutely free to submit your application form. A few lenders will not rebuff you, but approval cannot be guaranteed. Your credit report and repaying capacity will be thoroughly checked. If your credibility is called into question, you will be straightaway cast aside.

For some lenders, guaranteed loans are the same as guarantor loans

Guaranteed loans do not exist at all, but if you still come across them, they may be guarantor loans. You can find this information on their landing page. A guarantor loan will require you to have a guarantor. Normally, they should have a good credit rating and are needed only when you have a bad credit rating.

However, a few lenders seek a guarantor loan even if your credit rating is good. This is particularly the case when you are to borrow a larger sum of money. 12-month instalment loans can be quite expensive. Lenders may consider you a risky borrower, especially if the borrowing sum is large.

Having a guarantor mitigates the risk of a lender. In case you refuse to pay down the debt, they can call in on your guarantor to meet the obligation. However, it is not that easy to have a guarantor because a missed payment will affect your credit ratings as well as the guarantor.

If you arrange a guarantor, you should always ensure that the person acting as a guarantor knows the damaging effects they will bear if you commit a default. It can be quite hard to arrange a guarantor, especially if your past payment records are not stellar.

In that situation, you should consider applying for a loan with a co-applicant. A joint application will make it much easier for you to borrow money, especially if your credit report is not good enough. Bear in mind that your co-applicant must have a good credit rating. There are still chances that a lender keeps you from borrowing a larger sum because they will assess the individual repaying capacity of both of you.

Ways to improve your chances of getting 12-month loans

No lender will give you guaranteed approval on instalment loans, but there are some ways to improve your chances of getting approval faster:

You should try to have a good credit score. Most lenders will refuse your application for good deals. They will charge very high interest rates if your credit rating is not so good.
A few lenders might accept your application despite a very poor credit rating, but you will struggle to make payments. You will likely fall into a debt trap.
Beware of those lenders who claim to provide you with guaranteed approval, as they may charge extortionately high interest rates. It can be difficult to manage debt payments, and you might end up in a debt spiral.
Keep your credit utilisation and debt-to-income ratio as low as possible.
Try not to owe any debt at the time of taking out an instalment loan.

The final word

No loan comes with guaranteed approval. If any lender claims so, you should beware of them. However, by guaranteed approval, a few lenders in the UK can offer guarantor loans. You will have to arrange for a guarantor to get the nod for an instalment loan.