So here’s the deal – you can get personal loans at zero interest! Yes – interest-free personal loans enable borrowers to significantly reduce their borrowing costs and fully enjoy their loans.
So, what exactly are they? How do you qualify for them? How much can you borrow? We have that, and more. But first, check out the following list of potential lenders.
Yes, zero-interest loans exist. Make-no-mistake, though. zero-interest doesn’t mean ‘completely free’.
A borrower still has to pay the principal – the original amount borrowed – and other loan charges such as origination fee and prepayment fee.
That said, you should understand the difference between interest – the amount you pay for borrowing money – and APR which entails all the loan charges including interest rates. Interest-free personal loans attract zero interest, not APR.
Interest-free loans are promotional. You’re therefore supposed to pay it within a certain period. Once this time elapses, the loan will start attracting interest rates.
You’ll, therefore, want to make sure you understand the terms of the specific loan before taking it. Introductory interest-free loans are common with electronics, furniture, and auto loans.
Interest-free personal loans may not be the easiest to qualify for. Lenders are often stricter.
Different lenders have different eligibility checks. The most basic ones are;
Lenders are especially strict on your creditworthiness. Getting an interest-free personal loan on a low credit score is almost impossible. Generally, a credit score above 650 will favor you with most lenders.
You’ll also want to make sure you have a steady income. This will help you make your repayments on time. Missing out on repayments could lead to the withdrawal of the no-interest offer.
No interest rates: these loans don’t attract any interest. You’ll only pay other loan charges and the principal amount.
Stricter application process: Qualifying for interest-free personal loans isn't as easy as other personal loans. Lenders check on such things as credit score, income stability, and repayment history.
Cost-effective: Since borrowers don’t have to pay interests, they can save on that and only pay for the other loan costs.
Higher credit scores needed: Lenders are strict about your credit scores. Interest-free personal loans are mostly granted to borrowers with stellar credit scores.
Larger loans: interest-free personal loans borrowers can access higher loan limits with flexible repayment terms, as long as one has a stellar credit score.
Risky: Zero-interest loans are risky to the borrower. Because they’re normally on offer, missing out on a single repayment could mean losing the offer and paying interest, which is normally high.
Fast funding: Most interest-free personal loans lenders disburse loans within 24 hours of approval.
Versatility: You can use zero-interest personal loans for basically any bills. You can use it to pay rent, medical bills, sponsor your education, or a vacation.
Credit cards are recurrent loans. Unlike in normal personal loans where the lender issues the whole loan amount in a lump sum, in credit cards, your loan is disbursed in bits. You basically borrow every time you use your card to make a purchase or pay bills.
With interest-free personal loans, borrowers receive the whole loan amount at once upon approval.
Credit cards also carry higher interest rates. This is partly owed to the fact that they are labeled high-risk loans by lenders.
Interest-free loans, on the other hand, charge no interest. The borrower will, therefore. only pay the other loan charges and the principal amount.
We must also point out that credit cards are easier to qualify for, unlike zero-interest loans. Lenders will give you a loan even with a poor credit score. Interest-free personal loan lenders are strict, and you wouldn’t qualify for these loans with a low credit score.
Go for credit cards if you need a loan for smaller regular purchases such as shopping for households. They are also worth considering if you have a low credit score.
Consider interest-free personal loans if you’re looking to cut on the APR. It would also be a viable option if you have an excellent credit score and looking to take a significant loan amount.
Interest-free personal loan lenders give zero-interest offers to specific loan products. Ideally, you can borrow from $500 to $100,000 on this loan product or more.
How much you can borrow depends on your creditworthiness. An excellent credit score of 700 and above will get you larger loans and more flexible loan terms.
You can boost your credit score by servicing your existing loans on time. When that is done, lenders will update your credit records so you can access larger loans and better terms.
Shop around for lenders with more flexible terms.
You should also inculcate good lending habits. Resist the urge to get a loan when you don’t really need it. Before approaching a lender, exhaust other avenues such as friends and relatives.
Please note that apart from the lender decision, the type of interest-free personal loan will dictate what credit score you need. However, as we earlier noted, having an excellent credit score gives you the upper hand.
Here are some of the common types of low-interest loans you could try out;
Please note that, even though these interest-free loans are admirable, they have certain shortcomings. For instance, you could miss out on even more exciting deals, especially for auto loans.
Some lenders may also take advantage of you missing out on a repayment to charge exorbitant interest rates.
These are short-term interest-free loan products that come with the incentive if repayment is made within 30 days. Failure to which will mean revocation of the offer and payment of the full interest.
Other lenders also have such offers where they allow borrowers to borrow without charging them any interest. Such promotions usually run for 30 days.
Such offers are often given during economic crises, and emergencies such as disease outbreaks, and natural calamities such as floods.
They’re mostly offered money borrowed for medical equipment and relief aid. Both commercial and non-profit lenders offer this loan product.
This depends on the lender and the type of zero-interest loan you’re applying for. However, interest-free personal lenders are generally strict on credit score. They’ll require a good to excellent credit score
Yes, no interest-loans will save you some significant loan costs. However, only consider it if you’re sure to repay it within the zero-interest offer period. This will save you from paying higher interest rates. Also, thoroughly check the lender agreement to ensure you’re comfortable with every clause.
This depends on your needs, the available options, and the amount in question. The flexible and most common ones are personal loans and credit cards. Interest-free loans are among the cheapest.
Home appliances retailers, car dealers, medical practitioners, and non-profit organizations are the most common interest-free personal loan lenders. They’ll require you to have a good to excellent credit profile and could charge you even higher rates should you miss out on the repayment.
These loan products allow you to only return the principal amount borrowed with no interests charged. It only becomes active if you strictly follow the loan terms and repay within the agreed period.