12 month loan

About 12-month loan

There may have been a time when you exhaust your salary due to the occurrence of unexpected expenses. And you find yourself completely out of money to pay your bills. What we usually do in such situations is that we borrow from a friend. But what happens when we don’t have that option as well? Thankfully many financial institutions have started providing the 12-month loan to people who are in need.

The concept of this type of loan is that the lending company will lend you some money until you receive your next salary or income. The rate of interest is very high in such type of loans.

Features of the 12-month loan

  • It is an unsecured loan. You do not have to put anything valuable with the bank to get this loan.
  • It is a short-term loan. The tenure of this loan is very short. You can get a loan for a period until you get your next pay cheque or up to 1 year at max.
  • The high rate of Interest. The rate of interest is very high in such type of loan.
  • Online mode is available. One can get a loan approval by applying online.
  • Approval in a short period of time. Such loans are in a time as short as one day.

Benefits of 12-month loan

  • This loan is absolutely collateral-free.
  • Your loan can be approved even when you have a poor CIBIL score.
  • The loan approval takes place in a short period of time. You can get your loan approved on the same day you apply for the loan.
  • You can apply online and get your loan approved.
  • Meet all your liabilities or financial crises by making use of this loan.
  • The loan procedure is hassle-free and easy.
  • The lending institutions often allow the applicants to pay before specified tenure without prepayment charges.
  • The borrower is free to choose any mode of repayment from post-dated cheques, Electronic clearance service, and auto-debit facility.

Drawbacks of the 12-month loan

  • High-interest rate- The rate of interest can be so high in some cases that the borrower has to pay the double amount to clear off his/her debt.
  • Hamper CIBIL score- Such type of loans can severely hamper the CIBIL score of the borrower on late payment of the EMI amount.
  • Less number of lenders- This type of loan is doing a great business in countries like America. But in India, it is still a new concept. Not many financial institutions are providing such type of loan.
  • Only good for a small amount- This type of loan is beneficial only when the borrower applies for a small amount of loan. A huge amount can be highly troublesome to repay due to high-interest rate. Moreover, an application for a huge loan amount often gets rejected.

Personal loan and 12- month loan

The personal loan is an unsecured loan which is granted solely on the basis of an individual’s steady income source. It is given for the tenure of 6 months to 5 years. One takes such loan to meet certain demands where a huge corpus of an amount is required, such as wedding expenses, vacations, house repair etc.

12-month loan is basically a personal loan. The difference is that the maximum tenure for which one can take such a loan is only 12 month, One cannot take a huge amount of loan on the basis of one’s income. A small sum of money which is sufficient enough to meet daily expenses is only given as a loan. Apart from that, the rate of interest is comparatively very high from personal loans.

Eligibility for 12-month loan

Following are the important eligibility points for the 12-month loan,

  • The minimum eligible age is 21 years and the maximum is 60 years. However, some financial institutions allow the minimum age of 18 years and maximum age of 65 years.
  • One must have a steady source of income to apply for such a loan.
  • There is the requirement for a minimum income to be eligible to apply for such a loan. This amount varies among all the lenders.
  • Both salaried and self-employed can apply for this loan.
  • Salaried individuals must have been in a job for at least 2 years. And also they must have completed at least 1 year with their current employer.

Things to keep in mind before applying for the 12-month loan

  • Keep it a last resort- Apply for such loan only when you have no other option left with you to exercise.
  • Apply for only what you need- Getting more loan than you need may land you up in a huge debt. Therefore, keeping the high rate of interest in mind, apply for only as much amount as you need.
  • Repay on time- Ensure that you make timely repayment of your loan. The failure in doing so will reduce your CIBIL score.


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