Can I get an interest-free loan from a bank?
No, you can’t get 0% interest loans from traditional lenders. You’ll find many different types of loans on offer, but they all charge interest.
Some lenders might offer you 0% interest on a loan for a limited time, meaning you don't pay interest for the first few months. But after that, you’ll be charged interest until the loan is fully paid off.
However, there are other interest-free credit options to consider. And if you’re on a low income, you might be able to get an interest-free budgeting loan from the government.
Can I get an interest-free loan from the government?
Budgeting loans and budgeting advances are interest-free loans offered by the government. You could borrow up to £812, depending on your circumstances, to help you pay for essentials or unexpected expenses.
You could be eligible for a budgeting loan if you’ve been claiming one or more of these benefits for six months:
Income Support
Income-based Job Seeker’s Allowance
Income-related Employment and Support Allowance
Pension Credit.
You can use a budgeting loan to pay for clothing, rent, furniture and household appliances, home maintenance, planning a funeral, and costs linked to keeping or getting a job, for example.
Repayments are taken directly from your benefits and the amount you repay is based on your income and what you can afford.
If you’ve been receiving Universal Credit for at least six months, you may be able to get a budgeting advance.
What other short-term interest-free finance options are available?
If you’re looking to borrow, you could explore a number of options for interest-free borrowing in the short term. But whether they’ll work for you depends on your personal circumstances.
Interest-free overdraft
Some banks offer an interest-free ‘buffer’ on arranged overdrafts. This is the amount of your overdraft that you won’t pay any interest on. However, it’s typically a nominal amount unless you have a packaged bank account.
And some student bank accounts offer interest-free overdrafts, making them essentially an interest-free loan for students in the UK.
Other banks may offer an interest-free overdraft for a set period. You’ll be charged the standard interest rate after that, so aim to pay off your overdraft in full before then.
0% purchase credit card
A 0% purchase credit card lets you buy goods or services upfront, then spread the cost over a set period without paying interest. But you’ll still have to meet the minimum monthly payments or you risk losing the 0% deal (and damaging your credit score).
Once the 0% period is up, you’ll be charged the provider’s standard APR. It means you’ll need to clear the card in full by the end of the 0% period to avoid hefty interest charges.
0% balance transfer credit card
With a 0% balance transfer credit card, you can transfer outstanding balances from other credit cards and pay no interest on your debt for a fixed period – sometimes for more than 30 months.
You’ll typically be charged a fee for making the switch, usually between 2% and 4% of the amount you move across. And you may need to make your balance transfers within a set time (often within 30-90 days) after receiving the card to benefit from a 0% offer.
If you don’t pay off the full debt within the 0% period, you could face high interest charges on your remaining balance.
Be sure to make at least the minimum payment on time each month. If you pay late, you’ll be charged a penalty fee and could lose your 0% interest and damage your credit score.
0% money transfer credit card
You can use a 0% money transfer credit card to transfer money from the card into your bank account. You can then spend it however you like.
To qualify for the interest-free period, you may need to make the money transfer within a certain amount of time, often 60 days. And a one-off transfer fee of between 3% and 5% will be added to the total you bring over.
It’s generally best to pay off what you owe on the card before the end of the 0% interest period, otherwise you’re likely to be charged a high interest rate on any remaining balance.
As with other credit cards, it's vital that you make at least the minimum payment every month.
Buy now, pay later schemes
Rising numbers of online retailers and high-street stores allow you to pay using a buy now, pay later (BNPL) scheme such as Klarna or ClearPay to help you spread or delay the cost of purchases.
Many schemes offer 0% APR for a fixed period, giving you time to clear your balance before being charged any interest.
BNPL can make it easy to borrow money, and you may find you’re tempted to spend beyond your means. It’s essential to keep track of how much you owe (and when you need to pay it back by) to stay on top of your debts.
As with other forms of credit, missing a payment could mean you lose your 0% deal as well as pay extra fees.
Compare interest-free credit cards
Use our credit card eligibility checker to find out which 0% credit card deals you might be eligible for. It’s a soft search, so it won’t affect your credit score.
Check eligibilityCompare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
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