More than half of Americans have less than three months’ worth of emergency savings1. Find yourself in a situation where you need cash quickly? You might need a loan but would prefer to stay away from paying interest.
An interest-free loan allows you to loan the amount you need and pay just that amount back and in some cases there is no credit check. Let’s look at the details closer and find out what loans to avoid!
What is an interest-free loan?
More traditional loan allows you to take out a certain amount of funds with interest. This means that the terms of the loan and the interest rate are typically predetermined before you sign up.
With an interest-free loan there is no interest, you are only required to pay back the principal amount. This means if you borrow $200, you’ll only pay $200.
Some interest-free loans offer instant approval without requiring a credit check. This is a great option for someone with bad credit or no credit.
How does an interest-free loan work?
Given the name, an interest-free loan could sound like free money. It is important to keep in mind there is still the possibility of fees. Some institutions charge an origination fee to open the loan.
In most cases, the origination fee is usually a percentage of the loan. There might be fees involved if you fail to pay the loan off within the term agreement or if you miss a payment. Be sure to read the fine print and stay on top of your payments.
interest-free loans might have a quick turnaround meaning you’re given maybe a month to pay the loan back. This is different from more traditional loans. Consider paying the loan off early, if there are no prepayment penalties, to avoid potential fees.
Choosing a personal loan
There are lots of lenders to choose from for personal loans. This can be great but also a little daunting when the time comes to choose who to borrow money from when you need it.
When choosing a lender, choose one you trust or at least one that is known. Also, read the fine print and know what you’re getting yourself into before signing up. Make sure you know the details and expectations of the loan to cut back on surprises and negative credit implications. Finally, be realistic about what you can afford.
Loans, specifically interest-free loans, have certain requirements of when the loan needs to be paid back. Know your limits and if it is truly something you can afford to pay back when it’s due.
If you need quick cash because of an emergency but aren’t sure when you will be able to pay it back soon, there might be options other than taking out a loan that you haven’t considered yet.
Avoiding the payday loan trap
You might hear about payday loans often. They are usually quick and easy but you should approach with caution if you must use one. Payday loans are loans that tend to have higher interest rates and are expected to be paid back quickly.
This means you can end up paying a lot more than you borrowed and even be trapped into outrageous fees. Payday loans are usually expected to be paid back within two weeks, assuming you’ll have the money by the next time you’re paid.
It is best to be wary of payday loans but if you choose to use the payday loan option be very mindful of the due date, fees, and the amount you borrow. You could end up in a situation that puts you in more debt. It might be best to consider other options if you have the time.
Where can I find interest-free funding?
There are a few interest-free funding options out there. While most traditional banks have a long application and funding process, MoneyLion offers affordable same day funding. InstacashSM from MoneyLion features an interest-free cash advance in the palm of your hands.
4 steps to an interest-free funding
Instacash has a quick and easy application process that allows borrowers up to $250 in 4 simple steps.
Step 1: Sign up for a MoneyLion account
Download the MoneyLion application on your device or head to the MoneyLion website, sign up for MoneyLion, and open a RoarMoneySM banking account. You can sign up by using an email address and creating a password. This account gives you access to a wide array of MoneyLion products and benefits!
Step 2: Link your checking account
Having a checking account linked to your RoarMoney account helps ensure that you are getting the best options for borrowing. To do this, make sure you have your bank account number and routing number.
It is best to select an account that is used and in good standing, particularly one that has regular direct deposits. This ensures the opportunity to get a higher cash advance balance as MoneyLion uses 30% of your recurring direct deposit amount to determine your cash advance limit.
No checking account? No worries! You can repay your Instacash cash advance with an external debit card.
Step 3: Click on Instacash
Once you have successfully linked your existing account or signed up for a RoarMoney account, head back to the home screen. On the homescreen, select the ‘Accounts’ tab. Here you’ll see an option to tap ‘Instacash’.
Step 4: Select request and wait for your funds!
You’ll want to tap the ‘Request’ button that you see on the screen. From there, you’ll be able to select the amount of money you need and when you need it. Once the money is deposited into your account, the payment will automatically be deducted on the due date. The due date is determined based on your pay cycle. Once you pay it back you qualify to borrow more. Quick, easy, and no worries about interest!
Pick the best option for you
It is normal to find yourself in a financial pinch. There are options out there to help such as an interest free cash advances. Just be sure that you are getting funding from a reputable provider and that the terms are realistic for you.
MoneyLion offers great options for those that need a low-cost loan option because of their limited credit. With the MoneyLion Credit Builder Plus membership, you’ll gain access to numerous options.
For only $19.99 per month, you have access to the Credit Builder Plus membership which not only gets you cash fast but also helps you build your credit. You also get access to no-fee banking, cash advances through Instacash and optional auto-investing.
This is a win-win for you and your financial future and MoneyLion makes it easy! Sign up for a MoneyLion Credit Builder Plus membership today to start saving more and managing your funds today!
Can you borrow 0% money?
Yes! The most important thing is to be mindful of any associated fees, especially late fees that you’ll incur if your loan is not paid back in time.
Where can I borrow money ASAP?
You’ll want to make sure you are borrowing money from a reliable source when you’re in a financial pinch. For example, Instacash from MoneyLion lets you borrow up to $200 quickly!
Is it possible to get a loan with no credit?
Absolutely! The Credit Builder Plus program not only lets you borrow up to $300 per pay period but it can also help you build your credit at the same time.