Extramile Finance

12-month loans, also called instalment loans, paid down over a period of 12 months, are personal loans aimed at helping you meet small planned and unexpected expenses. While a decent credit report is a must in order to qualify for these loans, subprime borrowers are also accepted. However, high interest rates are levied. These loans are available from a bank as well as a direct lender.

Banks follow stringent approval criteria. You must have a stellar credit report and a strong income source. If your credit rating is less than perfect, you cannot be accepted by your bank. No matter how good a relationship you have with your bank, your subprime score cannot be ignored. Of course, when you are refused elsewhere, you have only one option left, which is direct lenders.

Approval criteria for 12-month loans for bad credit from a direct lender could be slightly harder than instant loans, to be paid off in one fell swoop, such as payday loans, but they still follow less stringent criteria than banks and mainstream lenders.

Benefits of 12-month loans obtained through direct lenders

Here is how 12-month loans from direct lenders can benefit you:

• Easy approval

One of the greatest benefits of using direct lenders for 12-month loans is that they have less strict criteria. Despite a poor credit rating, you have a chance of being accepted for a loan. If your income is great, you can offset the impact of your poor credit and qualify for better interest rates.

• Flexible payment plans

12-month instalment loans do not come with a specific amount of money. Here, the emphasis is on the repayment plan to ensure that you do not struggle to keep up with payments. However, it is still recommended that the money you borrow is large enough to be stretched for a full one year. If not, the repayment plan would be shorter than a 12-month length.

Borrowing from direct lenders is more convenient than banks because they will carefully evaluate your financial condition to decide if you can repay your debt on time. It is likely that your current budget does not allow you to make the payment on time. If that is the case, your lender will whittle down the size of an instalment.

A longer repayment period could cost you slightly more interest in total, but it reduces the risk of falling behind on payments, the biggest reason for accumulating debt.

• Simpler approval process

If you apply for a 12-month instalment loan from a bank, you will have to undergo a lengthy screening process. Not only will you be required to complete lengthy and complex paperwork, but you will also be required to undergo additional formalities, such as a bank official would like to run background checks, verifying your address, and the like. This may take a couple of days to complete the process. It means you will have to wait for a few days to get the approval process started.

However, if you like to borrow money from a direct lender, you do not have to jump through hoops. As soon as you put in the loan application, the decision is made on the same day. Make sure that you provide all your personal and financial details in your application form correctly.

Though the lengthy and complicated process is not run, you will still have to submit your pay slips and bank statements. A credit check is also a must, even if your credit rating is subprime.

• Bad credit borrowers are also accepted

Banks do not accept applications from bad credit borrowers. It means if your credit rating is not stellar, you cannot apply for a loan from them. However, direct lenders accept applications from subprime borrowers, and hence, loans for people with bad credit can be easily approved. However, it is worth mentioning that you will end up with high interest rates.

Subprime borrowers increase the risk of default. In order to lower the risk, lenders charge high interest rates. While a lender will carefully ensure your repaying capacity, a rule of thumb says that you should also check your repaying capacity at least once. Nobody knows your financial condition better than you do.

You should use an online loan calculator to determine the estimated cost of your loan. This will help you know how much you can pay down each month. Bear in mind that actual interest rates will be higher than estimated rates. Do you think your budget allows you to pay more money? If you are not so certain about it, you should drop the idea of borrowing money.

• No associated fees and charges

The best thing about choosing a direct lender over a bank to take out 12-month instalment loans is that they are subject to no fees. A lender will charge no hidden fees or monthly fees, responsible for adding up the cost of the debt.

However, you should carefully research because every lender follows different criteria. Some charge processing fees and monthly fees, while others do not. Some lenders may charge exit fees, while others do not. It is vital to get information about fees and associated charges from direct lenders beforehand.

Lenders disclose the fee structure in the loan agreement. Therefore, it is intrinsic that you carefully read the terms and conditions of an agreement and then decide whether you should sign it. No obligation is on you unless you sign the agreement. It could not be easy to back out, so make sure that you do not make a decision impetuously.  

The final word

12-month loans from direct lenders can benefit you in various ways because they speed up the process. Approval rate is also faster than banks and mainstream lenders. Subprime borrowers are also accepted.

The best thing about direct lenders is that they offer flexible repayment plans in order to ensure that you do not fall behind on payments. They also do not charge hidden fees. This makes interest charges much lower. However, you still have to research to choose a lender that does not charge any fees.