0% Interest Loans: Loans Without Interest

If you need money to pay for a financial emergency, you might have wondered, ‘Can I get a 0% interest loan?’.
In theory, an interest-free loan is money you borrow without having to pay any interest. However, the reality is that you cannot get an interest-free loan from a lender in the UK.

If you’re hoping to borrow money without paying interest, there could be other options to consider. You can find out more in our guide below.

Can I get a loan with no interest?

Is it possible to get a loan with no interest? It’s not possible to get an interest-free loan in the UK from a lender or credit provider.
When you take out a loan, you don’t just pay back the amount you’ve borrowed, but you also pay interest. Interest is the cost of borrowing the money and is included in your monthly repayments.

Alternative to no-interest loans: low-interest loans

When looking at loans, you’ll notice something called the Representative APR. It will look something like this: 79.5% APR Representative.
This is the interest rate or lower given to at least 51% of the people who were accepted for this product.
Generally, the lower the interest rate, the less you will pay in interest.

Which loans have the lowest interest?

If you’re approved for a loan, the interest rate you’re offered will depend on several factors, including your credit score and history, how much money you’re borrowing, and how long you’ll repay your loan.
The longer your loan term, the more you could be charged in interest.

How can I get a low-interest loan?

Having a good credit score could mean that you’re more likely to be eligible for a loan with a better rate of interest.

If your credit score is looking a little worse for wear and you’re looking to make improvements, ask yourself:

1. Are you registered to vote?
   Signing up to the electoral register makes it easier for lenders to verify (or check) your personal information. Not being on the electoral register could affect your credit application.


2. How often do you check your credit report?
   Make a habit of checking your credit report regularly for errors. Outdated or incorrect information could have a negative impact on your credit score.


3. Do you have any financial associations
   A ‘financial association’ is anyone you share a joint account or mortgage with, for example. If the other person’s credit score is poor, your own score could be harmed by association. If you notice any outdated financial associations on your credit report, you can ask your credit reference agency (CRA) to remove them.


4. How many credit applications have you made recently?
   Making multiple applications for credit with direct lenders could harm your credit score. If you’re thinking about applying for credit, have you thought about using a credit broker like Little Loans? Using a soft search with no impact on your credit score, a credit broker will scan a large panel of providers with just one application.*


5. Do you have a credit card?
   How you use your credit card can affect your credit score in many ways. If you’re working towards a healthier credit score, you’ll want to stay well within your credit limit and aim to keep your credit card utilisation below 30%. You might also want to avoid using your credit card to withdraw money from a cash machine; this is known as a ‘cash advance’ and could cause your credit score to drop.

What’s this? Your credit limit is the total amount of money that you’re able to borrow on your credit card. Your credit utilisation is how much you’re using. For example, if your credit limit is £200 and you spend £50, your credit card utilisation will be 25%.

Loans without interest for people on benefits

If you receive certain benefits, you could get some financial help if you need money to pay for an emergency expense, such as furniture or essential household appliances.

Alternatives to loans with no interest: borrow money interest free

While it’s not possible to get an interest-free loan from a bank or a direct lender, there could be other options available to you.

• Ask family or friends
  
  A friend or family member could be willing to lend you the money you need without charging you interest. While borrowing from a loved one could be cheaper than taking out a loan with a high street lender, you should think carefully before you go ahead. It’s important to agree on how often you’ll make repayments and how long you’ll have to pay back the full amount – it’s a good idea to get this in writing.


• Alternative to 0% interest loans: a 0% purchase credit card
  
  With a 0% purchase credit card, you won’t be charged interest on any purchase(s) you make for a set amount of time; for example, 6 months. Once the promotional period ends, any balance remaining or any new purchases you make will be charged interest at the standard rate for your account.


• 0% balance transfer credit card
  
  If you’re already paying off the balance on one or more credit cards, a balance transfer credit card could help you save money on interest. You could move the balance(s) of your existing credit card(s) onto a 0% balance transfer credit card and pay no interest for a certain period of time.
  Any balance outstanding once the promotional period ends will be charged interest at your standard rate.


• Buy Now, Pay Later (BNPL)
  
  If you need to spread the cost of a purchase, BNPL could be an option. Like all credit products, you should think very carefully before deciding whether to use a BNPL service.
  Every BNPL provider works differently, but typically, you pay some of the cost upfront, and the rest in instalments over several weeks or months.
  Other BNPL providers ask you to pay the full amount in 30 days, for example.
  You may be charged a fee for using a BNPL service.
  Is BNPL interest-free? This depends on the provider you choose, and you should read the documents they give you carefully.
  
  You can find out more about BNPL in our guide.

Could I search for an interest-free loan with Little Loans?

None of the lenders on the Little Loans panel offer interest-free loans.
The 30+ direct lenders on our panel offer loans between £100 and £10,000, with repayment terms from 3 to 60 months, depending on the amount of money you apply to borrow.

You can search for a loan with Little Loans if you:

• Are over the age of 18
• Are a UK resident
• Have a UK bank account and a valid debit card
• Have a regular source of income paid directly into your bank account

What to do if you’re worried about money in the UK

If you’re struggling with money, please consider reaching out to any of the following charities and organisations for free, confidential advice: StepChange, MoneyHelper, Citizens Advice, and National Debtline.

*Little Loans uses soft search technology to search for a suitable loan for you. If you’re matched with a loan and choose to make a full application, the lender will carry out a creditworthiness assessment, which will include a hard search and/or an Open Banking check. A hard search will remain on your credit file for up to 12 months, and multiple hard searches in a short period of time will harm your credit score.