Interest-free loans are those in which the borrower is only required to return the capital obtained. This does not mean that they are free, since sometimes expenses and commissions will apply. In addition, if the borrower does not pay on time, late payment interest will also apply. Next, the question is clarified and its advantages and disadvantages are analyzed.
Interest-free loans: myth or reality?
The loan is, according to the Civil Code, an essentially free operation. However, it does not escape anyone that, in most cases, the lender wants to do business by risking his money.
This use of the loan is legal, legitimate and has great acceptance, provided that the interests are not abusive. In fact, usury is prohibited by the netizens legal system. So does this mean that an interest-free loan is free?
How the interests of a loan work
To answer the previous question you have to know how the interests of a loan work. First, it is possible to differentiate between:
– Remuneration interests. It is a percentage that is applied to the money borrowed to calculate how much the borrower is going to pay the lender. In short, it is the price of the operation. It is usually determined according to a nominal interest rate (the famous TIN).
– Interest on late payment. They are an interest rate that is applied as a penalty for late payment of fees. As with remuneration interests, the lender may demand the interest rate it deems appropriate, provided that it is included in the loan agreement.
In short, when the term “interest-free loan” is used, reference is made to remuneration. In other words, if the borrower is late in the payment he will still have to pay the late payments. But, if the borrower pays on time, will his interest-free loan be free?
The expenses and commissions
The previous question has “trick” again, since most loans have a series of expenses and commissions associated. Therefore, even if they have no interest, they will continue to have these costs. That is why the APR is usually used to check the real price of the loan. The APR is the sum of the TIN plus these expenses and commissions.
So, should you apply for a loan without interest?
In short, these types of loans are real, but not free. However, given its great advantages, it should be requested before other types of credits (if there is a possibility).
Although their associated costs are usually higher, in the final price calculation they tend to be cheaper. Thus, interest-free loans have certain advantages (TIN is not paid) and disadvantages (other costs are paid) but are usually profitable. To check if they are cheaper than other financial products you just have to compare the APR of both.
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