In the fewest words possible, 0% loans are the kind of loans where you only have to repay the principal amount or the amount which was borrowed, and where the borrowers are not obligated to pay any extra charges or interest. With such an alluring offer, people naturally are drawn towards these loans.
Though they are 0% loans they are not entirely free and have their own catch, in addition, these loans are only granted to the applicants who have a credit score of 720 and above where the average score is somewhere between 721-880 and anything above 880 is considered a good score.
Once applied and granted a 0% loan, there are certain terms and conditions that must be followed and the borrowed money must be paid back within a certain time frame and failure to do so will result in hefty penalties. And to add on delayed payments and not adhering to the terms and conditions can reflect on your credit score. It is always wise to assess the situation before applying for a 0% loan.
Availing a 0% Loan
If it is a relatively small amount and if you have an above-average credit score and all the required documents then it would take 48 hours to get it approved.
If it is a large amount and if everything is in order then it will take longer to get approved.
And if any of the documents required for the approval isn’t submitted or is missing then the lending company may hold off on approving your loan. It is up to the borrower to make sure that all the required documents are submitted to get their loans approved.
Eligibility for a 0% loan
Before sending out an application for a 0% loan, make sure if you’re eligible for it.
- The applicant should be of the age 25 and above.
- The credit score of the applicant should be 720 and above.
- The applicant must be employed and should have a steady source of income.
- If the applicant is self-employed, then additional documents must be provided.
- The applicant must submit his latest salary slip to the lender and it should at least be equal to the minimum salary required to avail a 0% loan.
- The applicant also shouldn’t have any cheque returns in the last six months.
Think before availing a 0% loan
It is quite important to assess your current financial situation before applying for a 0% loan. There are certain questions you should ask yourself before applying for a 0% loan as it helps you assess your current situation better, questions such as “Do you really need the money?” “is it for something that you have been planning?” “Will you be able to afford it? Will you be able to pay back the borrowed money in time?”
“Have you been offered loans at high-interest rates?” as banks only charge high-interest rates when an individual’s credit score isn’t good and when the lenders think you’re a risk after looking at your financial history.
Questions such as these give you clarity on your current financial status and can help you make an informed decision.
Additional charges on 0% loan
It is a no brainer that even though this is a no-interest loan there are hidden charges that are applicable.
If the payment of any amount in a given time frame is skipped then the 0% loan becomes void and the credit reverts to a standard loan with an interest rate which is applicable.
There is also a hidden fee charged when the customer transfers the money from a regular credit card to the zero-interest credit cards.
Where to get 0% loans?
Furniture and Electronic retailers
A lot of furniture and electronics retailers offer very good deals on 0% loans. And that is only if all the payments are done on time.
A lot of car dealerships offer 0% loans while making a new purchase and only if your credit score is above average and has been kept like that.
They usually offer 0% loans only during the promotional period.
Also, the loan isn’t entirely interest-free, it is only free of interest for a certain time frame.
Due to the support being received for this scheme from medical practitioners and providers, some banks offer 0% loans on medical care.