An interest-free loan can be something positive at the same time as it can be something to look out for. The important thing is that you really read the terms carefully before writing any papers.
For example, it is common for the electronics stores to offer you to buy an item free of interest. It is then important to really check if it is interest-free during the entire loan period or if it is only for part of the time. Is there an interest rate later and how big is it then?
It can also come with things like setup fee and aviation fee which means it will not be free although there is no interest. Find out what the effective interest rate will be when it takes into account all costs and not just the ordinary interest rate.
Pay on time
An important thing to keep in mind is the importance of paying back in time. Now this is something that applies to all types of loans, but what is a little interesting about interest-free loans is that if repayments are missed, the loan will be extended and then it will not be interest-free anymore. Interest rates then will probably be high.
Interest-free loan – for a certain period of time
Sometimes you can find loans that are interest-free for a certain period of time and then start to cost money. These loans are perfect for those who know that you will receive money in the future to repay a loan but do not have it at the moment. For example, a credit card is an example of this, since you do not have to pay any interest if you pay the entire amount used up immediately when the invoice arrives at the end of the month. However, if you only pay in part, you may pay interest on what remains of the debt.
Just think about planning well before taking such a loan. If you are not sure that you have the money when it is time to start repaying, you should not take the loan even if it is interest free.