When making a loan, interest is the part the bank earns. Controlled by the Centrum Banks, the interest charge has a very significant impact on whether a loan is beneficial to the consumer or not economically viable.
As a result, most banks have developed strong competition to attract customers with the help of the most favorable interest rates possible. However, a new trend can be found primarily in the retail sector: The installment purchase of products can be done with the help of a loan.
In these cases, traders in many cases advertise that the loans are not linked to interest. But is a loan without interest possible and serious?
Credit without interest – that’s it and that’s something to keep in mind
Actually, an offer of a loan is completely without interest from the consumers once very critical to consider. These offers are usually not serious and simply serve to lure customers into the hands of the bank. On the contrary, it is precisely in the retail offerings that have established credit without interest that consumer advocates have warned in many cases of high hidden costs.
For example, there were hidden processing fees or simple increases in the prices that replaced the failed interest. However, the market has changed in recent years.
There are two reasons why a loan without interest rates is quite possible at the present time: the level of interest rates on the part of Centrum Banks and the strong competition among banks when it comes to generating new customers. In particular, the direct and online banks have done the business for retail banks and savings banks in recent years, a little heavier.
Due to the simple processes in this competition, more and more customers decide to give up the traditional account at the house bank. Of course, non-interest-bearing loans are an interesting way of getting clients lured and turned into regular customers with accounts and other services.
In addition, of course, there is also the reason of the very low interest rates of the current time anyway. Centrum Banks in Europe, the US and Asia keep interest rates very low, allowing banks to borrow large amounts of money at very favorable terms. If there is now an action in which they pass on these conditions to the customers, this usually has no real disadvantage for the bank.
5 tips on the loan without interest
It is only understandable if you yourself want to get the possibilities of such a loan and want to do, for example, an acquisition or use the loan without interest for debt restructuring. Especially with such offers, there are many things to watch out for if you want to end up using a loan that is not associated with any further costs or difficulties for the consumer.
1. Is the offer to be considered serious?
Especially with a quick search in the search engines on the Internet, there are a large number of offers advertised with the supposed interest-free loans. It even happens that these products are aimed at people who in a normal case would not be eligible for a loan, as the credit rating is not given.
If you are looking for a loan without interest, you should check very closely which providers are behind this offer. Only then can high costs after signing or legal problems be avoided when it comes to the final payment of the balance.
2. Assess actions correctly and use them for yourself
Most of these actions are offered when the bank tries to get new customers via the internet. For example, several price comparison portals have regularly offered promotions in recent years in which they offered such loans in collaboration with a bank.
In these actions, it is important as a consumer to be informed about the intricacies – or rather the fine print. In most cases, there are other conditions associated with these offers that only become active when the loan has been paid or the signature has been signed.
3. Always pay attention to the terms of the loan
Even if it is not a promotion, the terms of such an offer are mostly hidden in the terms. It could be advertised, for example, that the loan is offered at 0% interest. This applies, however, for example only in connection with the use of an account at the bank or a certain level of creditworthiness.
So before you make a fixed calculation with such offers and spend the money before it is on your own account, a comprehensive review of the actual conditions should be made.
4. Use O-percent offers when purchasing goods
A good and meanwhile widespread possibility of using such offers is in retail. Also in the above criticism of these things has been improved and today there are indeed many good options, where you can get financing with zero percent interest.
This is especially true for retail promotions. For example, you can make an expensive purchase with this loan and be glad that there are no interest rates on a bank.
5. Better to use a comparison for cheap loans
So instead of relying on this form of offer and being dependent on a variety of conditions in the end, one should rather use a comparison from the Internet and look for a reputable credit. The tools from the network allow a quick and easy search for the right products in the field of loans, with which you can be very satisfied as a consumer in the end.
With an interest-free loan, the borrower does not need to pay any interest. The lending without interest calculation is basically a friendships between acquaintances and relatives. But interest-free loans are also available today in the retail sector and even in banks. If, as is usual, invoices are to be paid fourteen days after receipt, the seller will grant an interest-free credit for this period. Furthermore, the payment by means of a credit card leads to a short-term loan without interest calculation. This refers to the time between the payment and the due date of the credit card statement.
Installment loan without interest
An ordinary loan that is not tied to a purpose without interest represents an unusual and only temporarily available offer. Various banks have lent for small amounts of mostly € 1,000.00 for a short period of time without charging interest. The intention of the financial institutions was that the customers also applied for the money requirement beyond this sum with them, but then at the usual bank interest rates, as a loan.
Of course, the exclusive use of the free installment loan was also possible. Interest-free lending has significantly increased the level of awareness of the banks offering them.
It thus represented an advertising measure of the financial institutions whose effectiveness did not occur through paid advertisements, but through the extensive reporting on this action. Repetitions are quite conceivable, especially since the financial institutions have to pay negative interest rates for their cash balances with the CEB.
Interest-free dealer financing
More than half of all retailers who offer their customers a partial payment refrain from calculating interest on loans. This applies regardless of whether the respective online trade or the stationary shop handles the installment payments on its own or in cooperation with a bank. At least with the usual purchase amounts apply for a payment in installments on a opposite to classical installment lending simplified way done, because the customer is required to submit any proof of income.
Before purchasing on an installment basis, buyers compare the prices of goods from different dealers. Not infrequently, it is generally cheaper to buy from a vendor without installment option and to finance a classic installment loan at a freely selectable commercial bank. This is always the case when the retail price of the retailer with part payment option is significantly higher than that of its competitors.
A special form of short-term interest-free lending by a dealer is the payment break. This is almost exclusively used as a special offer and means that the customer pays the purchase only after expiry of a payment term.
Special features of vehicle financing without interest
Vehicle buyers can finance their new car both through the dealer and the auto bank, as well as through an independent commercial bank. Interest rates are usually lower in dealer financing than in car borrowing through a traditional bank. On the other hand, a significant discount can only be negotiated with the car salesman if he does not participate in the financing costs. This principle also applies to the occasionally offered zero-percent funding.
Auto lending without interest calculation is generally valid in a few cases within a short promotional period, but usually for selected models. These are mostly vehicle models that are about to be replaced soon, or car models with previously poor sales figures. Depending on the car make and partial model is for a non-interest car loan to make a down payment, which can also be handled in the form of the sale of the end-of-life car to the dealer.