Zero-interest financing: how to save on interest

Zero-interest financing is a form of loan that does not require the payment of an interest rate, allowing a certain saving for the consumer. Usually, this type of offer is offered to particularly needy social categories or, more often, it is linked to types of consumer credit, aimed at the purchase of an asset. In these offers of interest-free financing, the intermediary that handles the sale (for example the dealer) stipulates an agreement with a bank or financial company and promises a zero rate on the purchase of the asset. But is the rate really canceled? 

To understand this, we need to understand the difference between TAN and APR. The TAN is the nominal annual rate and is the real interest rate that the bank requires from its client.

This is the remuneration for the loan disbursement

loan money

The TAN is expressed as a percentage of the amount the bank has paid and is calculated on an annual basis. The APR , as we have explained in detail in this article, is instead the annual percentage rate and is usually higher than the TAN: this happens because it counts both the interest and all the accessory costs necessary for the stipulation of the contract, the disbursement of the loan and its repayment (insurance, preliminary, collection, brokerage and bank commission expenses; notary fees are excluded).

When a zero-rate loan is proposed it is very likely that only the effectively zero

zero-rate loan

This means that we are not required to pay a real interest: we are talking about TAN zero financing . The installments will therefore not have a share of interest, but will only be used to repay the amount obtained on loan. However, it should not be thought that a loan at zero rate does not require any cost for the user: it is very likely indeed that all the expenses related to the financing remain to be paid and therefore that the APR is greater than zero. We therefore recommend that you carefully read the information leaflets about the financing offers and carefully examine the contractual clauses. 

interest rate

However, there is a form of loan that does not include any expense, other than the repayment of the loaned loan: this is the real zero interest rate loan. This loan not only provides for the zeroing of the TAN, but also of the APR, and therefore of all ancillary expenses, allowing a considerable saving to the applicant.