Frequently Asked Questions

Definitions

  • Zero-Interest Loans: These are loans where the borrower is not charged any interest on the borrowed amount, provided the loan terms and conditions are met
  • No-Interest Loans: This term is interchangeable with zero-interest loans, meaning the borrower only repays the principal amount without any additional interest charges, as long as the terms are adhered to

FAQs

  • The process usually involves filling out an application form, either online or in person, and the lender will review your credit history, income, and other financial factors. Additional documentation like proof of income or employment may be required

  • Borrowers must adhere to a rigid repayment schedule, often with monthly payments, and must pay off the loan within the specified interest-free period to avoid penalties and interest charges

  • Missing a payment or failing to pay off the loan within the promotional period can result in the lender canceling the zero-interest provision, applying backdated interest, and charging late-payment penalties

  • Deferred interest means that interest accrues in the background but is not charged as long as the balance is paid in full within the promotional period. If the balance is not fully paid, the borrower may be charged all the accrued interest retroactively

  • Yes, there can be application fees, late-payment penalties, and balance transfer fees, especially if using a zero-interest credit card to transfer debt

  • Applying for a new credit card or loan can result in a hard inquiry on your credit report, which can temporarily lower your credit score. Defaulting on a zero-interest loan can also damage your credit score

  • These loans can be used for specific purposes such as financing a car, appliance, or other retail purchases. The usage may be restricted depending on the lender and type of loan

  • If the loan is not paid off within the promotional period, borrowers may face substantial payments and higher interest rates, which can be a significant financial burden.

  • With zero interest, you'll never pay interest on your purchases during the promotional period. Deferred interest is trickier - if you don't pay the full amount by the end of the promotion, you'll be charged interest on your original purchase amount going all the way back to day one.

  • Yes! The government sometimes offers zero interest loans during emergencies or natural disasters, and for certain student loans. These programs are usually announced on government websites and local news.

  • It's super simple - just divide the total loan amount by the number of months in your promotional period. For example, if you borrow $1,200 for 12 months, you'll pay $100 per month.