0% Interest Loans
The concept of 0% interest loans may sound too good to be true to many people. However, there are a number of circumstances in which 0% loans (or at least 0% credit) are available. In most cases, a 0% loan will be tied to the purchase of particular products. In others, they are only available to people taking out a credit card or another financial product for the first time. If you’re looking for 0% interest personal loans, you may struggle to find a product that exactly matches that description. Despite this, there are plenty of other ways to get your hands on the finance that you need when you’re looking for 0% interest short term loans.
The Top Three types of 0% Interest Loans
The most popular type of 0% interest loan is a credit card offering 0% on purchases, balance transfers or both for a set period of time. There are some other options available from phone contracts to 0% interest personal loans for big-ticket purchases. We’ve explored some of the most popular forms of 0% interest finance below.
0% Finance on a Credit Card – balance transfers
0% finance on a credit card comes in two forms. The 0% rate will either be available on purchases or balance transfers. 0% interest on balance transfers can be a good idea if you run up a significant balance on another credit card or store a finance card that charges a high interest rate. A balance transfer arrangement will allow you to shift your balance or part of it from this card to another one that charges 0% interest for a certain period of time.
Make sure that you are fully aware of how this 0% interest loan works before you apply. There may be a set fee for making the transfer in the first place and fairly stringent rules when it comes to keeping up payments on the card. These rules may mean you will lose the promotional rate if you miss any payments.
0% finance on a credit card – purchases
This can be a very good option if you are looking to make a big-ticket purchase and the company you are purchasing from doesn’t offer any 0 per cent interest loan options. Many credit card providers have products that do not charge any interest on new purchases for a set period of time. Generally, you will have to make the purchase within a few months after opening the account. You will then have a certain number of months in which you will not be charged any interest on the balance that this has generated.
It is very important to have a plan to pay off the full balance of this purchase within the lifetime of the 0% interest offer (just like you would if you had taken out a 0% interest loan for 12 months). This is because the interest charges that kick in at the end of the promotional offer could be at a fairly high rate. Not clearing the loan in time would significantly increase the time it would take to clear the balance.
0% finance on a purchase
Offers like this have become more common in recent years, and many of them are offered by the financing divisions of banks. Therefore, if you are not able to find a 0% interest personal loan, this could be the next best thing.
Take a look at the company’s website that you are purchasing from to find out what finance options are available. Most companies that sell expensive items like sofas or personal electronics will have a partnership with a bank that allows them to offer 0% interest loans with the sales of certain products. Instead of paying in cash or handing over a credit or debit card to make your purchase, you will sign the paperwork for the loan in the store or online. In some cases, it’s not possible to set up these arrangements online, and you will need to go to the store with a form of ID to make the purchase.
Again, it is very important to make sure that you understand how the repayments work. Most 0% interest loans for purchases require monthly repayments. It is generally possible to choose a repayment date that suits you. Again, missing a payment can often lead to significant changes and very high interest rates, so it is essential to make sure that this does not happen and that your account is in good standing at all times.
Some of the Best 0% Credit Cards
|Bank||How long is 0% for?||Notes|
|Tesco bank||Up to 22 months||This is the longest 0% period. Get 1 Clubcard point per £4 on almost all spending at Tesco.||Apply|
|Sainsbury’s Bank||Up to 21 months||To qualify for this card, you must have had a Nectar card for 6 months. Bonuses include extra Nectar points when you spend money.||Apply|
|M&S Bank||20 months||All accepted get the 20 months interest free. Bonus includes M&S vouchers with points on spending.||Apply|
|Barclaycard||Up to 21 months||Bonus includes 4 free Apple subscriptions for up to 5 months.||Apply|
|Lloyds Bank||Up to 21 months||For balance transfers, you get 0% interest for up to 18 months, but a 2.99% fee on those transfers will apply.||Apply|
Are 0% interest loans right for you?
0% interest personal loans may not exist in their own right, but hopefully, this article has shown you that there are many ways to obtain 0% finance for a particular purchase or for example, if you would need to money to pay for emergency car repairs. As we have stressed throughout this article, the most important thing you can do before signing up for one of these products is to use a 0% interest loan calculator. This will ensure that you can afford the repayments and understand the monthly payments’ impact on your finances.
Is 0% interest credit available to everyone?
Lenders usually restrict their 0% finance offers to customers with the best credit ratings. If they’re not making a lot of money from the loan, then they need to be certain that the customer will pay it back without any issues.
Are there any pitfalls to be aware of with 0 per cent interest loans?
Most 0% interest personal finance products only offer the 0% interest rate during a promotional period. Low interest may only be available for purchases if you settle the amount in full within a certain amount of time. For credit cards, the 0% interest is likely to only be available for a certain number of months after you apply for the card.
It’s also essential to make sure that you keep your account in good standing through the 0% interest promotion life. Any missed payments or other blemishes on your account during the promotional period could result in the 0% interest rate being withdrawn and you having to pay the standard rate of interest (which could be relatively high) for the rest of the 0% interest loan period.
How can I improve my chances of qualifying for a 0% interest loan?
If you don’t have a great credit rating and you’re wondering how to get a 0% interest loan, then the best advice available is to keep up with all existing debt obligations. This will help ensure that you look like a safe decision to any finance firm you apply to. It can take a while, but eventually, you should find it easier to be approved for 0 per cent interest loans or similar financial products.
It can take some time for this behaviour to show up on your credit report and start making a difference to the 0% interest loans and other credit products that are available to you. If you would like a better idea of what your credit report says about you and what you can do to improve it, various free online services allow you to look at your credit report.