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Finding Interest Free Loans

By: Garry Crystal - Updated: 15 Aug 2013 | comments*Discuss
 
Finding Interest Free Loans

If you can stick to the terms and conditions then interest free loans can be a very good deal, probably the best you will find. Finding interest free loans is not a hard task as many banks and internet lenders offer them, as well as a host of other interest free loan options.

How Interest Free Loans Work

It doesn’t sound altogether believable that lenders will offer money and not achieve a return on the loan, but interest free loans do exist. However in order to make the loan interest free you must strictly adhere to the terms and conditions of the loan. If you miss a payment then the consequences will be severe on your finances.

Once you have applied and been accepted for an interest free loan then you will need to stick to the repayment scheme. If you miss any payments then a high level of interest will be charged; as much as a 30% annual percentage rate (APR). This interest will also be back dated to the time that you actually took out the loan, and this is how the lenders makes their money on interest free loans.

Finding Interest Free Loans

It’s not too hard to find some type of interest free loan. They are available from most banks, building societies, and online lenders. Use comparison websites to check which lender offers the best deals regarding APR if you happen to miss a payment, but don’t plan to miss any payments. Interest free loans do not just apply to actual bank loans; credit cards that offer introductory interest free periods are also credit loans. Some overdraft facilities can also act like interest free loans.

Always check how long the interest free period lasts, and the terms and conditions on transferring current balances from other credit cards. Also check whether the interest free period extends to balance transfers from other credit cards. Always remember to close down other credit cards if you are transferring balances; if you don’t these wills show up on your credit report and you may look over committed.

Missing Payments on Interest Free Loans

If you do miss any payments on your interest free loan then it will hurt your wallet. Lender’s rates will vary but high rates of APR are normal for missed payments. Setting up a direct debit to make repayments is the best way to avoid missing any repayment dates. It only takes one missed payment for your interest free deal to disappear.

You will then start accruing interest very quickly and it will be backdated. The golden rule when taking out an interest free loan is not to miss any repayments. Not only will the interest start if you miss a payment you will no doubt also be charged late payment fees, which can soon mount up.

Keep a Record

Keeping a record of all payments is a wise move. Banks and lenders make mistakes, sometimes frequently. Check statements every month in order to find discrepancies. Keeping records of your repayments will ensure that you have proof if any disputes do occur. If you do find that you are going to miss a payment then try and find the money to place into your account; one missed payment will be all it takes for the interest to kick in.

Other Interest Free Loans

Interest free loans do not just apply to banks and money lenders; there is a whole host of interest free loan offers. Many stores offer their goods with interest free payment options, and this usually extends to high price purchases. You can usually find car loans or home furnishing purchases with interest free rates. Always check the terms and conditions of these purchases, and always check the APR for missed payments. Buy now, pay later is the same as an interest free loan, so long as you pay before the interest free term ends.

Finding interest free loans and using them correctly can save a lot of money, and is the best option to go for. Just make sure that you will be able to stick to the repayment schedule. If you cannot stick to the schedule then you will lose a lot of money, and you may even gain a bad credit reference.

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