Why do financial institutions issue interest-free loans?

Even in a situation when an urgent loan is needed, many try to find the most advantageous offer with a minimum overpayment. The best solution, in this case, would be the conclusion of interest-free credit transactions with microfinance organizations.

What is a loan at 0%?

Such loans are the most profitable for the borrower, as there is nothing to pay for the use of the lender’s funds. It is worth noting that such transactions are profitable only in cases where the borrower clearly fulfills all of its obligations and pays the lender on time.

Such loans in most cases, microfinance organizations offer citizens who first become their clients. Similarly, they are attracting a new client, who may be talking about such a loan program to their relatives and even just acquaintances.

Microfinance organizations are forced to go into the development of interest-free lending programs because of great competition in this area, because a large number of microfinance organizations are already registered and their number is constantly increasing, even though some of them lose their license, are closing.

The benefits of interest-free loans for the borrower

Such loans are issued without checking credit histories, and therefore it is beneficial to submit an application for such a loan to individuals who previously had problems with repaying credit debt and negative records appeared in their credit history. Borrowed funds in this way can be obtained, even if at this moment there is a loan that has not been closed.

Such a loan option can be called profitable because it does not have to pay for opening a credit account, cashless transfer of funds or carrying out a cash transaction, as is often the case when receiving a bank loan.

Such lenders do not require permanent registration; the main thing is that the borrower has a passport. Transactions take place without guarantors or other security. Students and pensioners can get it, as well as people who do not have an official place of work, which is beneficial to tutors, nannies, etc.

Secure transactions

Many are afraid to enter into transactions with microfinance organizations, as they have heard a lot of negative information about such lenders. Another reason is high-interest rates. Today, such transactions can be called safe and relatively profitable. Now the state is serious about such creditors. Companies must have permission to conduct credit transactions. To get it, the lender has to agree with the installation of a relatively low percentage, as well as with other requirements.

If a company violates the law, it loses the license and leaves the State Register. The borrower needs to check the presence of the lender in such a register before signing the contract. If such a company is not on the list, then its activity is illegal and the conclusion of a transaction with such a creditor can lead to serious problems.

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