By now all of us have heard the term interest free loans that is like a magnet that pulls in new customers because who does not want to get a loan that has zero precent interest? In this article we will determine what exactly are these elusive interest free loans and how effective they really are and find out if there are no hidden fees.

The short answer is that in general these loans really are without any interest and you will have to repay exactly the same amount of money that you borrowed without any additional expenses. For example if you borrow 200 Lari for 30 days then you will have to repay exactly 200 Lari. These interest free loans are very common and most of the lenders in this non-banking credit market offer services where their new customers get the first loan without any additional costs. And this is why these interest free loans are sometimes called just “free loans” because if we examine them closely you really get a service completely for free and as long as you repay the loan you have no additional costs. Of course that does not mean that you can get a loan and not repay it as the definition of a loan is that you borrow something (in this case money) for a pre-determined time period and then repay the amount that you owe your creditor.

The most common interest free loan type is these fast loans where you can borrow money on short timeframes and usually the amount that you can get does not exceed 1500 Lari. But these loans are not made for large payments but are in general used for small purchases and emergencies. And for these purposes short term loans are very effective and if they are interest free then you can borrow knowing that you won’t have to pay extra.

When you can borrow an interest free loan?

Interest free loans are usually reserved for new clients and that means only the first short term loan that you will borrow will be without interest and from that point on you will have to pay interest on all your debt. But because there are many different lenders then each time that you need money you can register and borrow if from a different lender. These fast loans are profitable for lenders only if you pay interest and that is why with these first zero interest loans these businesses loose money and they are more like a marketing tool that hooks users and then companies can profit from them. If you borrow money from a company (even without interest) then you will be more likely to borrow again and again and that is why these businesses are willing to get some short term losses so they can get profits in the future.

How much can you borrow?

In general interest-free loans are only offered by quick loan companies and that means that you won’t be able to borrow large amounts of money. Usually you can get interest free loans up to 1000Lari but the average amount is somewhere around 200 to 500 Lari. Lenders don’t want to give customers the chance to borrow large sums because then they loose the chance to get interest on that money and the risk that the client will default on these larger loans increases.

What are interest free credit repayment terms?

These interest-free loans are just like the regular quick loans and you can borrow them on the same repayment terms than any other loan at that company. That means usually you can get an interest free loan for a 30 day period and at the end of that term repay the money without any additional cost. If you feel that you will no be able to repay your debt in the pre-determined time frame then you have the option to extend this period but that is a paid service and as soon as you miss your payment this interest free loan turns into a regular debt and you will have to pay interest on all the money that you have used. This is why it is crucial that you repay your fast loan in time and if necessary take out another interest free loan from different lender to repay the first one so you won’t have to pay that extra money to your lender.

Are these loans really without any interest?

When you take out a quick loan that is without interest you can be assured that you will not have to make any hidden fees or payments and you will have an annual percentage rate(APR) of 0%. And this offer is one of the best ones that you can get because there are no other services that offer you something for free. And it just shows how powerful is capitalism and free trade as this usually leads to competition between businesses and that competition is good for the end consumer. And these interest free loans are the proof that even in the credit niche competition leads to lower costs and better offers.