Interest-Free Loans for April 2024

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Mr. Payday
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up to $10.000
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Personal Loan
Rating by Finanso®

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™

Effective interest rate on the product

up to 46.96%

Loan term for the financial product

up to 60 months
Coast Capital Savings
Personal Loan
Rating by Finanso®

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™

Effective interest rate on the product


Loan term for the financial product

60 months
Royal Bank of Canada
I appreciate the transparency in the loan terms provided by Royal Bank of Canada, with no hidden fees or charges.
Royal Bank of Canada
RBC provided me with a flexible loan repayment schedule, making it easier to manage.
Royal Bank of Canada
I encountered some hidden fees when repaying the loan with RBC, making it more expensive than I expected.
Royal Bank of Canada
Unfortunately, the loan terms offered to me by RBC turned out to be less favorable than those of other banks.
Royal Bank of Canada
It's very convenient to use RBC's online services to manage my loan and make monthly payments.
Royal Bank of Canada
I obtained my home loan with RBC, and they were very flexible in setting terms that suited my financial capabilities.

What is an Interest-Free Loan?

An interest-free loan, often referred to as a no-interest loan, is a credit arrangement where borrowers are not required to pay interest on the principal amount they borrow. In this financial model, individuals are responsible solely for repaying the borrowed principal through scheduled payments, including down payment, without the additional burden of interest charges. Such loans are commonly offered by various entities, including car dealerships, retailers selling high-ticket items like furniture and electronics, and financial institutions through specialized credit card deals. The allure of no-interest loans lies in their capacity to entice customers into making purchases they might otherwise hesitate to undertake due to the absence of interest fees.

Even though it is possible to secure a loan with temporary 0-interest rate, there are no truly interest-free loans available from mainstream lenders. Specific circumstances, such as purchasing a vehicle from a car dealership or expensive items from certain retailers, may qualify for zero-percent financing. Yet, borrowers should be cautious, as hidden clauses within these contracts could trigger interest charges, making it crucial to thoroughly understand the terms and conditions associated with purportedly interest-free financing.


  1. Zero Interest Charges. Interest-free loans in Canada involve no additional charges on the borrowed principal amount, allowing borrowers to repay only the original loan amount.

  2. Limited Time Period. The interest-free status typically applies for a specific duration, after which standard interest rates may be applied. For example, credit cards with zero-percent introductory rates often have a time limit, usually within 12 to 18 months.

  3. Available for Specific Purchases. Commonly associated with purchases from car dealerships and retailers selling high-value items like furniture and electronics, interest-free loans are often tailored for specific products or services.

  4. Credit Card Deals. Financial institutions may provide zero-percent rates through special credit card deals, either as an introductory offer or through balance transfer credit cards.

  5. Risk and Credit Score. Lenders offering interest-free financing often target borrowers with high credit scores. However, certain conditions within the loan agreement may trigger interest charges if not met, emphasizing the importance of responsible financial management.

  6. Deferred Interest Clause. Some interest-free loan contracts may include a deferred interest clause, allowing lenders to retroactively charge interest on the entire balance if payments are not made on time or if the loan is not repaid within a specified timeframe.

  7. Impact on Credit Score. Despite being interest-free, these loans still impact credit scores. Factors such as payment history, credit utilization ratio, and timely payments play a role in determining the borrower's credit standing.

Pros and Cons


Cost Savings. Borrowers can save significantly on interest expenses, making interest-free loans an attractive option for those looking to minimize the overall cost of financing.

Affordability. The absence of interest charges makes repayments more affordable, particularly for individuals making large purchases, such as a vehicle or expensive furniture.

Promotional Offers. Some interest-free loans come with promotional periods, providing a window for borrowers to benefit from zero-interest rates for a specified duration, offering short-term financial relief.


Limited Availability. Truly interest-free loans are not widely available and are often restricted to specific circumstances, such as vehicle purchases from certain dealerships or high-value items from select retailers.

Hidden Conditions. Borrowers must carefully review the terms and conditions, as hidden clauses within the loan agreement, such as deferred interest or default triggers, could result in unexpected charges.

Limited Timeframe. The interest-free period is usually temporary. Once it expires, borrowers may face high default interest rates, particularly with credit cards, potentially leading to increased financial strain.

How to Get an Interest-Free Loan

Apply for a Loan

  1. Understand Eligibility Requirements. Research lenders or institutions that offer interest-free loans in Canada. Be aware of specific eligibility criteria, as these loans are often targeted at borrowers with high credit scores.

  2. Identify Suitable Lenders. Explore options such as car dealerships, retailers, or financial institutions known for providing interest-free financing. Check for promotional credit card deals with zero-percent introductory rates or balance transfer options.

  3. Research Specialized Programs. Investigate government programs or initiatives that may provide interest-free loans for specific purposes, such as education or home improvements.

  4. Verify Loan Purpose. Confirm that the loan is available for your intended purpose, as interest-free options are often tied to specific purchases or services.

  5. Review Terms and Conditions. Thoroughly read and understand the terms and conditions of the loan agreement. Pay attention to any hidden clauses, such as deferred interest or default triggers, that could lead to unexpected charges.

  6. Maintain a High Credit Score. Regularly check and maintain a high credit score, as lenders offering interest-free loans typically target borrowers with excellent credit histories.

  7. Consider Specialized Credit Cards. Explore credit cards with zero-percent introductory rates or balance transfer options. Look for cards that align with your financial needs and offer an interest-free period.

  8. Negotiate with Dealers or Retailers. When making significant purchases, negotiate with car dealerships or retailers to secure interest-free financing as part of the deal.

  9. Be Wary of Inflated Prices. Be cautious of potential inflation of product prices by retailers offering interest-free loans. Ensure that the overall cost remains reasonable.

  10. Understand Repayment Terms. Clarify the repayment schedule and ensure that you can meet the required payments within the interest-free period.


  1. High Credit Score. Many lenders offering interest-free loans prefer borrowers with a high credit score, typically above a certain threshold.

  2. Steady Source of Income. Demonstrating a stable and consistent source of income is often a requirement to ensure borrowers have the financial capacity to repay the loan.

  3. Specific Loan Purpose. Some interest-free loans are tied to specific purposes, such as purchasing a vehicle or home improvements. Borrowers may need to meet criteria related to the intended use of the funds.

  4. Eligibility for Government Programs. For government-sponsored interest-free loans, borrowers may need to meet specific eligibility criteria outlined by the program, which could include factors like income level or project type.

  5. Agree to Terms and Conditions. Borrowers must agree to the terms and conditions specified in the loan agreement. This includes understanding and adhering to any clauses related to repayment, default triggers, and eligibility for the interest-free status.


  1. Limited Timeframe for Zero Interest. The interest-free status is often applicable for a specific period, such as an introductory period for credit cards or a promotional period for special financing deals. After this period, default interest rates may apply.

  2. Strict Repayment Schedule. Lenders may impose a strict repayment schedule, requiring borrowers to make timely payments to maintain the interest-free status. Failure to adhere to the schedule could result in the imposition of interest charges.

  3. Specific Purchases or Services. Interest-free loans are frequently tied to particular purchases or services, and deviating from the agreed-upon use of funds may impact the interest-free status.

  4. Credit Score Monitoring. Lenders may reserve the right to monitor the borrower's credit score throughout the loan period. Negative changes to the credit score, such as missed payments, may trigger interest charges.

  5. Hidden Clauses. Borrowers should be vigilant for hidden clauses within the loan agreement, such as deferred interest or default conditions, which could lead to unexpected charges.

  6. Negotiation Terms with Dealers/Retailers. For loans offered by dealerships or retailers, borrowers may need to negotiate terms, and the conditions could vary based on the agreement reached during the purchase.

Best Places to Get an Interest-Free Loan

  1. Fairstone Financial, a licensed consumer finance lender, distinguishes itself by offering 0% interest loans with a generous cap of up to $25,000 for periods spanning 24 to 60 months. With a commitment to flexibility, Fairstone simplifies the borrowing process through convenient online applications. Eligibility criteria include a minimum employment tenure of 3-6 months, Canadian residency, and adherence to specified income thresholds. Notably, unsecured loans from Fairstone don't necessitate collateral. Moreover, Fairstone reinforces financial responsibility by reporting customer information to credit bureaus.

  2. MBNA True Line Mastercard, a credit offering from the online lender Refresh Financial, stands out for its 0% interest credit cards and lines of credit, accommodating amounts up to $10,000. Noteworthy features include the absence of annual fees, and terms extend from 24 to 60 months. Eligibility requirements include Canadian residency or permanent residency, a 6-12 month employment history, and compliance with income and credit criteria. Refresh Financial sets itself apart by offering unsecured revolving credit without requiring collateral, and it ensures customers' credit activities are reported to credit reporting agencies.

  3. The Scotia Momentum No-Fee Visa Card stands out with its $0 annual fee. It offers an introductory interest rate of 0.99% on balance transfers for the initial 6 months, followed by regular rates of 19.99% / 22.99%. The balance transfer fee is set at 2%. This credit card option from Scotia provides financial flexibility without an annual cost, making it an attractive choice for users seeking a balance transfer option with competitive rates.

  4. Tangerine Money-Back Credit Card is a noteworthy option in the credit card landscape, boasting a $0 annual fee and an introductory interest rate of 1.95% on balance transfers for the initial 6 months. The standard interest rate stands at 19.95%, with a balance transfer fee of 3%. Tangerine's credit card offering appeals to those seeking a cost-effective solution with a temporary lower interest rate, and the absence of an annual fee adds to its attractiveness. This card aligns well with users looking for practical benefits and financial flexibility.

Things to Pay Attention to

  1. Eligibility Criteria. Understand the specific eligibility requirements set by lenders or programs offering interest-free loans. Ensure you meet criteria related to credit score, income, and the intended use of funds.

  2. Loan Purpose Restrictions. Clarify if the interest-free loan is restricted to specific purposes, such as purchasing a vehicle or home improvements. Deviating from the intended use may impact the interest-free status.

  3. Terms and Conditions. Thoroughly review the terms and conditions outlined in the loan agreement. Pay close attention to repayment schedules, default triggers, and any clauses that could lead to the imposition of interest charges.

  4. Limited Timeframe for Zero Interest. If the loan comes with an introductory interest-free period, be aware of the duration. After this period, default interest rates may apply, affecting the overall cost of the loan.

  5. Repayment Schedule. Understand the lender's expectations regarding the repayment schedule. Timely payments are crucial to maintaining the interest-free status, and any deviations may result in additional charges.

  6. Impact on Credit Score. Understand how taking on an interest-free loan may impact your credit score. Responsible management can positively contribute to your credit history.

  7. Availability of Truly Interest-Free Loans. Be aware that truly interest-free loans are limited in availability. Some loans may appear interest-free initially but could have conditions that trigger interest charges.

  8. Financial Affordability. Assess your financial capacity to make the required payments. Ensure that the loan is affordable within your budget, considering both the interest-free period and potential default interest rates.

  9. Professional Advice. Consider seeking further assistance from financial experts or advisors before committing to an interest-free loan. They can provide insights into the overall financial impact and whether it aligns with your financial goals.

How to Repay an Interest-Free Loan

  1. Understand Repayment Terms. Thoroughly review the repayment terms specified in the loan agreement. Pay attention to the schedule, frequency, and any specific conditions related to repayment.

  2. Create a Repayment Plan. Develop a comprehensive repayment plan that aligns with the terms of the interest-free loan. Outline the dates and amounts of each payment to ensure timely and consistent repayments.

  3. Set up Automatic Payments. If possible, set up automatic payments through your bank. This ensures that payments are made on time, reducing the risk of missing deadlines and potential defaults.

  4. Avoid Missed Payments. Timely payments are crucial to maintaining the interest-free status. Missing payments or defaulting on the loan may lead to the imposition of interest charges or other penalties.

  5. Review Grace Periods. If the loan agreement includes a grace period, be aware of its duration. Take advantage of this period if needed, but ensure that repayments are made within the specified timeframe to avoid additional costs.

  6. Communicate with the Lender. If you encounter financial challenges or foresee difficulties in making a payment, communicate with the lender promptly. Some lenders may offer flexibility or alternative arrangements.

  7. Track Payments. Keep a record of all payments made. This documentation can serve as proof of repayment and may be useful in case of any disputes or discrepancies.

  8. Repaying Larger Installments (if applicable). If the interest-free loan involves larger installments due at specific intervals, plan accordingly. Ensure that you have the necessary funds available to meet these larger payments.

  9. Consider Early Repayment. If allowed by the loan agreement, consider making early repayments to reduce the overall duration of the loan. Confirm with the lender whether there are any penalties or restrictions associated with early repayment.

  10. Regularly Check Loan Repayment Status. Periodically check the status of your loan to ensure that it remains interest-free. Verify that you are meeting all conditions outlined in the agreement.

Reasons for Getting Rejected for an Interest-Free Loan

  1. Low Credit Score. Lenders offering interest-free loans often target borrowers with high credit scores. A low credit score may result in rejection, as it suggests a higher risk for the lender.

  2. Insufficient Income. The inability to demonstrate a stable and sufficient source of income may lead to rejection. Lenders want assurance that borrowers can comfortably repay the loan amount.

  3. Failure to Meet Eligibility Criteria. Not meeting specific eligibility criteria outlined by the lender or program offering the interest-free loan can lead to rejection. This may include factors such as age, employment status, or intended use of funds.

  4. Incomplete or Inaccurate Information. Providing incomplete or inaccurate information on the loan application can result in rejection. Lenders rely on accurate details to assess the borrower's financial situation.

  5. Recent Negative Credit History. Recent late payments, defaults, or other negative marks on the credit report may contribute to rejection. Lenders assess the borrower's credit history to gauge their creditworthiness.

  6. Unstable Employment. Lack of stable employment or frequent job changes can be a red flag for lenders. They may prefer borrowers with a consistent employment history, as it assures income stability.


  1. A line of credit is a flexible financial arrangement that allows individuals or businesses to borrow money up to a predetermined limit. Unlike traditional loans, where a lump sum is provided, a line of credit enables borrowers to access funds as needed. Borrowers are only charged interest on the amount they use, and once repaid, the credit becomes available again. This revolving credit line offers flexibility and is commonly used for short-term financing needs or to manage cash flow fluctuations.

  2. Credit unions are member-owned financial cooperatives that offer a range of financial services, including savings accounts, loans, and other banking products. Unlike traditional banks, credit unions are non-profit entities, and members, who are also owners, benefit from lower fees and competitive interest rates. Credit unions operate with a community focus, often serving specific groups or communities, and emphasize a member-centric approach to banking. Members have voting rights, and profits are typically reinvested to benefit the membership through improved services or reduced fees.

  3. Pawnshop loans are a form of secured short-term loans where borrowers use valuable items, such as jewelry or electronics, as collateral. The pawnshop assesses the item's value and offers a loan based on a percentage of that value. If the borrower repays the loan within a specified period, they retrieve their item. However, if they default, the pawnshop retains possession of the item. These loans don't involve credit checks or impact credit scores, making them accessible to individuals with poor credit. Pawnshop loans are a quick but often costly solution for those in need of immediate cash.

Editorial Opinion

Interest-free loans can be viewed as a commendable initiative in certain contexts, providing borrowers with an opportunity to access financing without the burden of additional interest charges. From an individual's perspective, such loans can offer financial relief and facilitate responsible borrowing. However, it's crucial to approach interest-free loans with a discerning eye, considering the potential drawbacks and limitations. Lenders, including government programs, may impose specific eligibility criteria, and borrowers must be aware of hidden clauses that could trigger interest charges under certain conditions.


Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your province. You can verify this information with your state regulator or attorney general.

  2. Check if the lender is a member of a reputable association, such as the Canadian Lenders Association (CLA). Membership in such organizations may provide an extra level of reliability.

  3. Carefully review all the terms and conditions of your payday loan contract.

  4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

  6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.


At Finanso, we've carried out a comprehensive analysis of over 70 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.


Does anyone do interest-free loans?

Interest-free loans are offered by various entities, including certain car dealerships, retailers, and government programs.

Car dealerships often provide zero-percent financing as a promotional tactic to attract customers, while retailers may offer interest-free loans for specific high-priced items. Additionally, government programs, particularly Canada student loans, may provide interest-free loans to support students.

However, it's essential to carefully review the terms and conditions associated with such loans, as eligibility criteria and hidden clauses can vary.

Which bank gives loans without interest?

Traditional banks typically do not provide loans without interest.

While some financial institutions may offer promotional periods with zero-percent introductory rates on credit cards or balance transfer options, these are temporary and subject to specific terms. Truly interest-free loans are rare from mainstream lenders due to the financial risk involved.

However, credit unions or non-profit organizations may provide more favorable terms for their members, although interest-free arrangements are not guaranteed.

Are interest-free loans allowed?

Interest-free loans are legally allowed in Canada, and various lenders, including car dealerships, retailers, and government programs, offer such financing options.

However, these loans often come with specific conditions and eligibility criteria. Car dealerships may provide zero-percent financing for vehicle purchases, retailers may offer interest-free deals on high-priced items, and government programs may extend interest-free loans for certain purposes.

Loan Terms