Do interest-free loans or free financing ring a bell? Do they sound familiar? I know you must be thinking it to be a false alarm or a hoax call but sometimes that’s not the case they are as lucrative as they appear to be. Borrowing money isn’t as easy as it appears to be. Interest usually refers to the money the creditors take in lieu of the money they lend you.

Interest-free loans are truly what they actually claim to be. These are the loans that levy no interest. Having said that, it doesn’t essentially imply that the loan is free. There are typically three ways that these loans are showcased in front of the public. Despite being called interest-free loans, you have to pay them in one way or the other. Lå to know more about loans.

Clearly speaking an interest-free loan is a debt for a shorter time duration for which you don’t pay any interest. Broadly, this is a type of loan that you can avail in the form of a credit card or can also use as an overdraft from your current bank account. The best part of this is that they don’t drain you financially. The main reason why people opt for these loans is when they plan to furnish their house, plan a new house or vehicle, or even when they decide to go for a holiday. Not only for these reasons but also to boost your business during stressful times.

Some of the basic eligibility for such loans include a valid identity card, proper address, and income proof of the applicant. The credit score is not that important and you can avail of this facility even if you don’t have a great credit score. These are at times suitable for small businesses or students where the amount is not that huge.


  • One is when you don’t have to pay the complete amount till the end of the promotional offer. In case you are unable to do that within the stipulated time you end up paying backdated interest rates which might take a toll on your pocket.
  • The next option is that the interest-free chunk might be applicable only for a limited time but is unavailable for the complete loan process. This is mostly seen in the case of APR, which is the annual percentage rate offered by credit cards. We can see them operating on free financing for a year or so and further announces the change in their interest rates.
  • Lastly, some organizations will change the way they address the word ‘interest rates.’ Some might call it origination fees, application processing fees, or pre-payment fees. The main strategy behind this approach is that they deduct a huge sum of money so that you borrow an even great amount from the firm.

Sometimes people fail to realize that interest-free loans do exist but these are mainly prevalent for high-priced merchandise. Let us look at some examples from our day to day life


  • Costly Consumer goods- Sometimes customers find 0% interest loans/credit cards at the shops which most deal inexpensive products such as costly electronics, jewelry, or even luxury furniture. Most of the time, they are another hook for deferred interest payouts.
  • Automobiles- Another significant area where you find this policy of zero interest rate is during the clearance summer months when the dealership wishes to create room for new orders.
  • Dental or Medical proceedings- Sometimes you would have seen boards or ads of dentists or doctors saying that they are offering their services at 0% interest rates. These are primarily for the services which don’t find a place in the insurance policies. Some examples include LASIK, plastic surgery, or any cosmetic dental procedure.

If in real life you are really looking for some interest-free alternatives try considering the below options:-

  • Reach out to your near and dear ones (friends and family) to give you a loan or borrow money from them
  •  Start saving and create an emergency fund account
  • Apply for need-based credit or grants depending on your financial situation
  • This option is not very enticing but you may consider applying for a 0% APR credit card which offers no interest rate within a particular promotional timeframe.

Interest-free loans mostly are not available, they are just like an eye washer. However, you can get an interest-free loan in case of a credit card or some banks offer that free overdraft facility. Despite all the features, you must be really cautious while opting for a loan. The amount of money you borrow is completely your choice but as a suggestion, the amount must be small so that you can repay them easily. Sometimes, your credit score also becomes immaterial in case you are applying for an overdraft.


Before opting for any loan, you must consider and take into account the following questions:-

  • What is the purpose of the loan you’re opting for?
  • How much money do you need to borrow?
  • By when and how would you be repaying the loan?
  • What amount can you pay back every month?
  • Is it the necessity or luxury that you would fulfill post getting this loan?

The answers to the above questions will help you understand the basics of finance. Based on them, you would get to know the real need and how you would pay back the loan in case you opt for that. There is no point in taking a loan and becoming a defaulter. A debt-free life is a stress-free life and keeping this thought in mind, a lot of credit card companies have started laying low rates of interest on their cards. Depending on the need, the loan tends to be justified.

A loan must opt only in case of a critical situation. Opting for a loan must not be encouraged as a regular practice. One must rely on the resources he/she has rather than pushing their limits and borrowing a huge sum of money on a regular basis.