What is a Zero Interest loan? Find out here and apply for one
A loan on which interest does not accumulate, rather, the borrower must only repay the principal. For example, one may borrow R5 000 and pay the lender R5 000 over a period of two years, at which point the debt is considered repaid.
Well sounds idyllic but when it comes to money and financing nothing in this world really ever is for free, as there’s always a catch. For one thing when it comes to this sort of deal unless you can afford the monthly payments equal to the total cost that you took the loan out for you may end up paying more.
How you may ask since considering it’s a zero interest loan. Well let’s say you take out a loan with a zero interest which requires repayment of the full loan within a year. And if for whatever reason you can’t make or afford the monthly payments towards the loan and skip payments on certain months. You could be strapped with accrued interest for the entire year on the full balance of the loan, even if you had paid down a significant portion of the loan.
Ideally, when you take advantage of such loan offer it’s best to make monthly payments in full that will total the full loan amount. Or to get that last payment in before the end of the repayment period so to avoid any finance charges at all.
Zero-interest loans are the only loans permitted in Islamic finance. They’re also extended to persons, companies and countries in desperate need of aid.