A low-interest loan is a type of loan that comes with an interest rate that is lower than the average or prevailing interest rates for similar types of loans. These loans are often sought after because they result in lower overall borrowing costs and more affordable monthly payments.

Companies that offer zero-interest loans tout these vehicles as no-lose opportunities for borrowers. A major purchase that might otherwise require a lump-sum payment can be spread out over 12 months to several years, with 0% interest, thereby creating a more palatable cash flow situation. But such loans present pitfalls, including the temptation to make impulse purchases, the tendency to overspend, and exposure to exorbitant penalties for violating a loan's terms.

Low-interest loans offers

LightStream Personal Loans

LightStream provides an attractive option for personal loans, especially if you have a strong credit history. With competitive interest rates and a lack of fees, it's a borrower-friendly choice.

Pros and cons

SoFi loans

SoFi's personal loans stand out as a top-tier lending option, boasting the qualities of a five-star lender. They offer a wide range of loan amounts, flexible repayment terms, and a host of special features that set them apart. 

Pros and cons

Upstart Personal Loans

Upstart is an online lending platform that facilitates personal loans by connecting borrowers with banks and credit unions. While it offers fast approval and funding times, it comes with some limitations.

Pros and cons

Discover Personal Loans

Discover stands out for several reasons. First, it offers unsecured personal loans, which means borrowers don't have to provide collateral like a car or savings account. 

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Universal Credit Personal Loans

Universal Credit’s starting rates are high compared to other bad-credit lenders, so compare loan offers before you apply.

Pros and cons

Santander Loans

Santander offers various loans for personal needs, cars, home improvements, consolidating debts, and special occasions. 

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Sainsbury’s Bank Loans

Sainsbury's Bank, a subsidiary of the esteemed UK supermarket, offers a diverse range of financial services, including loans, credit cards, insurance, and savings accounts, with a focus on customer convenience and competitive solutions. 

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Novuna Personal Finance

Novuna offers a range of loans including car, home, debt consolidation, and leisure, all with flexible terms and competitive rates.

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Tesco Bank Personal Loans

Tesco Bank offers diverse loans for your needs: small, large, and flexible long-term options to suit various financial goals.

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HSBC offers Personal, Premier, Car, Home Improvement, and Debt Consolidation loans with competitive rates and exclusive Premier benefits.

Pros and cons

Zero-Interest Loan Basics

As its name suggests, a zero-interest loan is one where only the principal balance must be repaid, provided that the borrower honors the rigid deadline by which the entire balance must be satisfied. Failure to comply with the deadline carries hefty penalties. Most notably, the lender may rescind the 0% clause and apply backdated interest to the loan.

FAQ about Low-interest loans

Which loan has no interest rate?

Loans that have no interest rate are typically referred to as "interest-free loans." These loans are relatively rare, and when they do exist, they often come with specific conditions and are typically not offered by traditional financial institutions. Here are a few examples of interest-free loans:

  1. Zero-Interest Credit Cards: Some credit card companies offer promotional periods during which no interest is charged on purchases or balance transfers. These promotional periods are usually limited in duration, and after the promotional period expires, regular interest rates apply.
  2. Employee Loans: Some employers offer interest-free loans to their employees as a workplace benefit. These loans are often designed to help employees with immediate financial needs and are repaid through payroll deductions.
  3. Government or Nonprofit Programs: In some cases, government agencies or nonprofit organizations may offer interest-free loans to individuals for specific purposes, such as education or home improvement. These programs are often targeted at low-income individuals or specific community development initiatives.

What's the lowest amount for a loan?

Minimum loan amounts are set by individual lenders, so the smallest loan you can get from some lenders may be more than you need. But there are lenders that offer small personal loans, including loans of $1,000 or less.