Loans with 0 interest

How To Get Zero Interest Loans In The Philippines

A loan with 0 interest is simply repaying the principal — or the amount borrowed from the lender without any interest. However, you should be cautious so as to identify if your loan includes any hidden fees, such as an origination.

In other circumstances, no-interest loans have promotional deals, and the loan must be paid off within a certain time frame before interest begins to accrue. However, before you apply, read the tiny print and bear in mind that you may not qualify for 0% interest financing unless you have an excellent credit history.

Loans with an initial 0% interest rate for a specified period sometimes include deferred interest. That is, if you make late payments or do not pay off your debt, you will be penalized.

To get a 0 interest loan in the Philippines, you need to gain more insight into a zero-interest loan.

What is a Zero-Interest Loan?

A zero-interest loan is simply a loan without interest. It is the type of loan that requires repaying only the principal balance provided that you meet the agreed deadline for repayment. Collecting personal loans and having to pay them back with no interest attached to them is one of the ways most financial institutes entice new customers to their institutes.

Some of these institutions that offer loans with 0 interest are available in the Philippines. While trying to borrow a 0 interest loan here in the Philippines, you first need to understand that if you are unable to repay your loan at the exact agreed deadline, your lender may revoke the zero percent clause and charge backdated interest on the loan.

Zero-Interest Loan Penalties and Fees

Acquiring a loan with zero interest in the Philippines might sound so enticing. But, the truth is that it can also turn into nightmares if you do not completely comprehend the loan agreement.

Since it's a loan with no interest attached, lenders are usually fast to remove the 0 interest loan offers even when you fail to make only one payment.

Below are some fees and penalties you might incur by taking a zero interest loan.

1. Processing Fee

Lenders impose a small fee to cover the cost of processing the personal loan application, which includes credit checks and administrative charges. This particular fee is taken from the amount you want to collect.

Therefore, you need to always consider this cost when calculating how much to borrow to ensure you obtain just the amount you need.

Loan processing costs in the Philippines range from PHP 1,500 to PHP 3,000. Social Security System (SSS) deducts a 1% service fee.

2. Documentary Stamp Tax

This fee is usually charged by the Bureau of Internal Revenue (BIR). Ideally, a cost of about PHP 1.50 to PHP 200 is required for a loan over PHP 250,000.

3. Lateness Fee

Missing a due date might result in higher loan costs. Its penalty fees usually range from 3% to 8% of the late amount, or PHP 500 per month, whichever is greater.

For instance, suppose you have a BPI personal loan and have skipped a payment for a month. You will be charged a 5% late payment fee. Your loan penalty fee is PHP 50 if your outstanding balance is PHP 1,000.

Simply avoid this extra cost by paying your monthly amortization on or before the due date every month.

4. Notarial Fee 

This is often known as an attorney's fee, and it is required when you violate the loan contract. The fee ranges from PHP 125 to PHP 150, and it covers the costs of collection and litigation when a borrower defaults on a loan.

How To Borrow Money At 0 Interest

Before applying for a loan, especially when it's your first loan, it's important to do your research and thoroughly evaluate your finances if you intend to borrow from financial institutions that lend money with interest.

Here are a few steps on how to borrow a personal loan with 0 interest rate in the Philippines:

• Do A Proper Research

This is the first step you must take before borrowing a loan from your lender. It will help you know who or where to borrow from.

Doing proper research will enable you to figure out how much you need to pay monthly since you would not want to apply for a loan that you cannot afford.

Also, to receive a 0 interest loan in the Philippines, try not to choose the first offer you come across. Examine the internet for the best online loan 0 interest offers such as banks, government organizations, and other financial institutions that can provide you with a personal loan.

• Prepare The Requirements

Once you've narrowed down your options, look into the lending requirements of your lender. To qualify for a personal loan, some lenders need a minimum annual income. You may also be required to provide documentation showing your identity and source of income.

Then organize your documents. This will expedite your loan application and spare you the stress and inconvenience of returning to the lender's office to submit all of your paperwork.

• Carefully Read Terms And Conditions

This is a very important aspect when borrowing money from any financial institution. Don't just go ahead to apply for a loan or sign a document without reading and understanding the terms and conditions for getting the loan.

• Apply For The Loan And Prepare For Repayments

After you've decided on the finest option for your needs, it's time to apply for a low-interest personal loan. Again, make sure your paperwork is in order and that you are eligible for the loan.

It's also a good idea to create a payment plan for your loan. Adjust your budget to account for your monthly payment, and make sure you're not spending more than 30% of your monthly income simply to pay off debts.

Where To Borrow Money Without Interest

If you are in the Philippines and looking for where to borrow money without interest, consider the following options:

• Online Lending Companies

There are many online lending companies in the Philippines that offer loans without interest. Often, the zero interest rate applies only to the first loan and the term of such a loan is up to 7 days.

• SSS Salary Loan

The SSS salary loan is a government loan with no or sometimes low-interest rate. People who are eligible can an equivalent of their of their monthly wage or two months’ wage credit and repay it over a 2 year period.

Loan repayment is extremely convenient for employed borrowers because their monthly amortization is immediately withdrawn from their income. It's no surprise that it's the Filipinos' first pick for their short-term financial demands.

• Family and Friends

Family and friends are good sources for securing credit facilities without incurring interest rates. Ideally, your family and acquaintances will be willing to help you with emergency funds when they can without asking for anything in return. This is usually a form of goodwill.

Conclusion

While no-interest loans are available for many reasons, you need to carefully consider if the purpose for the loan you intend to borrow is worth the debt and if you can easily afford to repay on or before the deadline. Remember - don’t apply for a loan if you do not understand its “terms and conditions” to avoid creating problems for yourself in the future.

FAQs

1. What loans have no interest?

Ideally, most zero-interest loans are offered by online lending companies, government, not-for-profit organizations, or family and friends. Also, some organizations offer these loans to attract customers.

2. Is it possible to get an interest-free loan?

Yes. There are financial institutes that provide such offers mostly for emergencies up to 7 days. 

3. Is a no-interest loan legal? 

Yes, it is. A loan is only regarded as unlawful if its interest rate exceeds the amount mandated by law.

4. What is a loan with no interest?

This is a type of loan where only the principal balance is repaid — provided that the borrower pays on or before the due date.