Is there a thing as a zero-interest personal loan?

While Bajaj Finance does not offer zero-interest personal loans, you may be able to access financing for more than 1 million+ products with the option to pay no-cost EMIs on the Bajaj Finserv EMI Network.
Personal loan
3 min

While some lenders may offer zero-interest loans, personal loans are unsecured loans that are mostly offered with an interest rate and strict terms of repayment. Read our handy guide to understand the differences between the two.

What is an interest-free loan?

As the name suggests, zero-interest loans or interest-free loans are loans that require the consumer to pay only the borrowed principal amount over a fixed loan tenure. While these loans do not comprise an interest component, they may come with strict repayment clauses, including penalties for default and delays. Consumers are advised to read the loan offer document or agreement carefully before agreeing to the terms.

What is a personal loan?

A personal loan is a type of unsecured loan provided by financial institutions that can be used for almost any purpose. Unlike secured loans, where you would need to offer an asset as collateral, personal loans do not require any collateral to get the loan.

This means that the lender does not have a direct claim on any of your assets if you fail to repay the loan. However, this also means that personal loans usually have higher interest rates compared to secured loans, reflecting the higher risk taken by the lender.

Personal loans are versatile and can be used for various purposes, such as consolidating debt, financing a large purchase, covering unexpected medical expenses, or even funding a wedding. The amount you can borrow, the interest rate, and the term of the loan can vary widely depending on the lender and other factors such as your credit history, income, and credit score.

Bajaj Finance does not offer zero-interest personal loans. Our personal loans start from 11% and come with attractive features including instant approval and quick disbursal.

Having said that, we do offer 1 million+ products on No Cost EMIs on India’s largest EMI Network.

All you need to know about the Bajaj Finserv EMI Network

If you are an existing customer of Bajaj Finserv, there is a high probability that you own the Insta EMI Card. This card allows you to shop at 1.5 lakh+ partner stores across product categories such as electronics, fitness equipment, gadgets, furniture, and more.

You can shop for these products on special low-EMI and No Cost EMI schemes with the choice of longer EMIs. And during festive seasons, we also run zero-down payment schemes.

What are No Cost EMIs?

No Cost EMIs are a kind of easy instalment facility where you can convert the cost of your products into EMIs and pay nothing above the agreed purchase price.

No Cost EMIs may also be referred to as zero-cost EMI or interest-free EMI. You can avail of No Cost EMIs at various online and offline stores using the Insta EMI Card.

How do No Cost EMIs work?

You can calculate your EMIs under the No Cost EMI scheme by dividing the purchase price with the length of the repayment tenure.

For example, let us say you visit a Bajaj Finserv partner store and decide to buy a television on No Cost EMIs. Assuming the amount you pay (post discounts and processing charges) is Rs. 50,000. To pay this amount, you opt for a repayment tenure of 12 months. With this tenure and product cost, your monthly EMI will be Rs. 4,166.67 (i.e., Rs. 50,000/ 12 months).

What are the advantages of a loan without interest?

Loans without interest offer several advantages, making them an attractive option for borrowers under certain conditions. Here are some of the key benefits:

  1. Cost savings: The most obvious advantage is the savings on interest payments. Interest can significantly increase the total amount you pay back on a loan, so a zero-interest loan can lead to substantial savings, especially for larger purchases or significant loan amounts.
  2. Easier budgeting: Without the need to account for interest, repayments are more predictable, making it easier for borrowers to budget and plan their finances. You know exactly how much you need to repay each month, which can help in managing your cash flow more effectively.
  3. Better accessibility to products: Zero-interest loans can make high-value goods and services more accessible. For example, consumer durable loans without interest can allow individuals to purchase household appliances, electronics, or furniture they might not be able to afford upfront, spreading the cost over a period without the added burden of interest.
  4. Can improve credit score: If managed correctly, taking a zero-interest loan, and making regular, timely repayments may have a positive impact on your credit score. This can be beneficial for borrowers looking to build or improve their credit history.
  5. Promotional offers: Interest-free loans are often available through promotional offers, providing additional benefits such as discounts on the goods purchased, loyalty points, or other incentives that add value to the transaction.

What are the advantages of a loan without interest?

While loans without interest can seem highly attractive at first glance, they do come with certain disadvantages that borrowers should carefully consider:

  1. Additional fees and charges: One of the main drawbacks of zero-interest loans is the potential for additional fees and charges. Lenders may recoup their costs through processing fees, administration charges, or penalties for late payments. These fees can sometimes negate the savings made from not paying interest, making it essential to read the fine print and understand all associated costs before committing to a loan.
  2. Shorter repayment terms: Interest-free loans often come with shorter repayment terms compared to traditional loans. This can result in higher monthly payments, which may not be affordable for all borrowers. The pressure to repay the loan quickly can lead to financial strain, especially if unexpected expenses arise.
  3. Limited scope: Such loans are typically restricted to specific purchases or transactions, such as consumer goods or promotional offers. This limits the borrower's flexibility in using the loan for broader financial needs or emergencies

Zero-interest loans may present an appealing financial tool for individuals looking to manage their purchasing power smartly. However, vigilance is key. It's crucial to account for any associated fees and understand the loan's terms fully to ensure it aligns with your financial strategy.

As you navigate the complexities of personal finance, remember that loans, whether zero-interest, secured, or unsecured, are tools at your disposal. Used wisely, they can facilitate your financial goals, but it's paramount to stay informed and choose the options that best suit your needs and circumstances.

As we mentioned above, we do not offer zero-interest personal loans. But you will find that our smart personal loans, available on our app and our website, can help you get the money you need when you need it.

Apply for our personal loan online. Alternatively, check out the Bajaj Finserv Insta EMI Card and start shopping today.

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