Interest-Free loans mean that you are not charged any interest when borrowing money. It sounds very enticing, but it is not exactly that easy. Many banks and companies offer interest-free loans that can only be achieved when certain conditions are met. The ordinary borrower does not easily meet conditions such as an excellent credit score. Sometimes the interest-free loans are not available for the entirety of the loan. Interest-free loans do exist in the forms listed below.
Interest-Free Loan Options
1. 0% Purchase Credit Card
If you want a small loan to buy something and would not like to get charged interest, you should consider getting yourself a 0% purchase credit card. This is essentially a credit card that allows you to buy the product you want and within the limit, and you will not be charged interest during the agreed period.
With this credit card, you can purchase anything you want within the agreed limit and pay back in instalments spread out in the interest-free repayment period. The period is usually longer than standard credit and lasts from 6-12 months. To get this, one has to have a good credit score.
2. Automobile Loans
Some dealers offer interest-free loans to some of their vehicles as promotional offers. These vehicles are usually the ones the dealership wants to eliminate to create room for new models. The dealer will offer an interest-free loan on these vehicles to entice buyers to go for this particular car model and not any other.
3. Interest-Free Bank Transfer
This option allows you to transfer your credit and debts to an interest-free account for the agreed period. This is after you pay the upfront transfer fee. Once in that account, your credit and debts will not be charged interest. However, you have to pay off the loan on the agreed period, usually 12 months. If you don’t do this, the account will incur high-interest rates.
Companies that sell expensive products that are not affordable to the average earner will offer interest-free loans on their products once in a while. This means that you can buy their products and pay them in instalments at the asking price. These will help increase sales on these products, and people who would not usually afford to buy these products will now be able to.
4. Overdraft Small Loans
Some banks offer interest-free loans on small amounts borrowed if paid within the agreed time frame. This time frame is usually within 12 months, depending on the amount borrowed. Others offer such incentives for first-time account owners. This is in the hope of encouraging the consumer to trust the institution as their banking partner.
5. Medical Procedures
Doctors and hospitals sometimes offer interest-free loans on some procedures. These procedures are usually not covered by the insurance cover. Cosmetic surgeries are an example of such procedures, and such offers make them affordable.
6. 0% Money Transfer Credit Card
This works similarly to the interest-free bank transfer. It allows you to transfer your debts from interest charged credit cards to a 0% interest credit card. This allows you to pay off your outstanding debts without paying interest. It gives you breathing room if you have a high-interest rate charged on your other credit cards. However, you should always check as you are usually charged transfer fees for the transaction. You can check this out for the best interest free credit cards
Are Interest-Free Loans Good?
There are several advantages of interest-free loans, but you need to be careful before signing any deal to avoid being tricked into a problematic agreement. Click here to know about personal loans.
The following are some advantages of interest-Free Loans;
- Make things affordable. Interest-free loans on expensive products and procedures make them affordable. You can now access such products at a rate you can afford. You should always be on the lookout for such promotional offers, and you can afford these products sooner rather than later.
- You can save money. The interest charged on loans is not cheap and will cost you more when paying back. However, interest-free loans allow you to get the same loan at no extra cost. You also get to pay for your outstanding debts without paying interest if you transfer the money to your interest-free account.
You should be careful when borrowing these loans as sometimes they are traps to get you to pay more. Some of the interest-free loans you are offered have a limit period. When this expires, you are charged interest on your outstanding amount. Interest-free is not easy to come by. They also have conditions attached to them. Always read carefully between the lines before signing any interest-free loans.