Interest Free Loans

Discussion in Loans started by remnant • Apr 20, 2016.

  1. remnant

    remnantActive Member

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    People prefer interest free loans for the obvious reason that they are cheaper to service. One example of such loans is found in the Islamic banking system which I have learnt is based on the fact that it is a vice to charge interest on a loan. Do you know of any such system or banks offerring interest free loans?
     
  2. xTinx

    xTinxWell-Known Member

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    Honestly, interest-free loans are too good to be true and if you're talking about bank loans, it's impossible for them to lend out loans without any form of security. Interests are there to ensure that banks won't be at a disadvantage for letting people or companies borrow huge sums. They secure the bank in the event debtors fail to pay on time. Lenders won't be able to gain anything if they let people borrow money without interests.
     
  3. djdontpay

    djdontpayActive Member

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    That's not accurate. It only applies when muslims lend to muslims. Islamic banks do charge an interest when lending to non-muslims. Case in point, I borrowed a ton of money from Dubai and was charged about 4% interest.

    I do know of such a system that is hard to beat- friends and family :) I mean sure, they can't lend you a million dollars but they can provide you small interest-free loans.

    Also, certain universities provide interest free loan- some for the short term and others for the long term. For example, Carnegie Mellon provides such loans in case of emergency, maternity, etc.

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    Finally, there are very specific loans for various niches, professions and industries. If you're an entrepreneur, researcher, etc. you can always look for grants. Although, this is uncommon in the US, this is very common in Nordic countries and in certain emerging markets where the local governments just want people to start a business and do not charge any interest and do not charge any fees or taxes either.
     
  4. Jamille

    JamilleActive Member

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    I used to think that the only interest-free loans are those that I borrow from my parents. Well, I found out a few years ago that there are indeed reputable banks that offer zero-percent balance transfer credit card loans. They don't give you the money directly, but they pay off your other credit card's balance. The goal is to entice new members to their bank and possibly earn from new purchases that the card holder will make when they use their new card. This is not common though, and a bank will usually offer this only to new card holders and within a limited time.
     
  5. Nakitakona

    NakitakonaActive Member

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    We think it over it is to the disadvantage of the lender to grant loans to their borrowers without charging interest or else they would be in the losing end. They would be no business for that matter to survive. You mentioned about the Muslim banking system for usury is against their beliefs. But the question is: could their banks survive for that practice?

    By the way, I have availed of free-interest loan so to speak as a consideration for me for being a good and update in my loan payment. But it is only for a very short-termed loan. We call it as a cash advance. It is being repaid without interest within a month.
     
  6. larryl332

    larryl332Active Member

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    Well anytime you hear something like that I would hope that it is met with scrutiny and making sure that interest free is what you think it means, because I have the feeling it is not. Read the fine print and that free may not be so free after all.