No-interest loans: 5 options to consider

A no-interest loan may sound like the perfect solution when you’re short on cash. But no interest may not mean no cost.

Some popular cash advance and buy-now, pay-later apps offer short-term zero-interest loans but may charge fees that can increase the amount you have to repay. Here are our picks for the best no-interest loans.

• Best for low fees: Earnin
• Best for managing your finances: MoneyLion
• Best for peer-to-peer loans: Chime
• Best for buy-now-pay-later: Affirm
• Best for building credit: Sezzle
• What are no-interest loans? 
• Can you get an interest-free loan?
• When is a no-interest loan a good idea?
• Alternatives to no-interest loans
• FAQs about zero interest loans

Best for low fees: Earnin

Why Earnin stands out: With Earnin, you can receive interest-free cash advances of up to $750 per pay period while waiting for your next paycheck. Earnin doesn’t charge mandatory fees for standard transfers, which take one to three business days. If you need the money sooner, you may be able to get it in minutes using Lightning Speed for a fee.  

Pros

• No credit check
• Tips are optional, not required
• Overdraft protection with low-balance alerts

Cons

• Need a steady paycheck, direct deposit into a checking account and a fixed work location or an employee-provided email address to use the app

Read our full review of Earnin to learn more.

Best for managing your finances: MoneyLion

Here’s why MoneyLion stands out: With MoneyLion, you can track your finances, buy cryptocurrency and invest your spare change.

Pros

• Free cash advance in 1-5 days
• No credit check required
• Cash advances up to $500 without a RoarMoney account

Cons

• Can only access $1,000 cash advances with RoarMoney which requires recurring direct deposits

Read our full review of MoneyLion to learn more.

Best for peer-to-peer loans: Chime

Here’s why Chime stands out: You can receive loans from family and friends (even if they don’t have a Chime account) without using cash apps like Zelle or Venmo as long as you have a valid debit card or Chime checking account.

Pros

• No transfer, monthly, minimum or overdraft fees
• SpotMe can cover up to $200 on Chime debit or credit card purchases without charging an overdraft fee
• Access to financial products and services like secured credit card and high-yield savings accounts

Cons

• Charges fees for out-of-network ATMs or cash deposits

Best for buy-now, pay-later: Affirm

Here’s why Affirm stands out: Affirm is a company that allows retailers to offer installment loans before checkout. If available, you may be able to use Affirm as a payment method on participating retailer’s website or app. Affirm’s pay-in-four option may be 0% APR for some retailers. Larger loans offered through Affirm may not be interest-free.

Pros

• Some retailers offer 0% APR
• No late, service or prepayment fees
• Can pick a payment plan that works for you — but depending on what you choose you may pay interest

Cons

• No refunds for interest paid on returned items
• Down payment may be required

Learn more from reviews of Affirm.

Best for building credit: Sezzle

Here’s why Sezzle stands out: Sezzle is a buy-now, pay-later company that allows you to split up your purchase at checkout and includes thousands of retailers, such as Touch of Modern, Bass Pros Shops and Target.

After paying off one order on time or early, Sezzle users can upgrade to Sezzle Up. When you upgrade your account, Sezzle reports your payments to the credit bureaus, helping you establish a positive payment history when you pay on time.

Pros

• Reschedule one payment per order for free
• Reports payments to the credit bureaus

Cons

• Charges failed payment, rescheduled payment (if you reschedule more than one payment per order) and convenience fees
• Spending power may vary per order

Read our full review of Sezzle to learn more.

What are no-interest loans?

 No-interest loans, also known as zero interest loans, are loans that don’t charge interest. Zero interest loans are typically smaller loans like cash advance loans. But zero-interest or cash advance loans can have short turnaround times which may make repaying them more difficult. 

If you’re looking at a loan with an introductory financing offer that touts a 0% APR for a set period, make sure to keep an eye out for the fine print. Often, if you pay late, miss a payment or don’t pay your balance in full before the promotional period expires, the lender may charge interest retroactively.

Keep in mind that just because a loan offers zero interest, doesn’t necessarily mean the loan won’t have additional fees, especially if you want your money quickly. But a small fee to get money quickly in a pinch may be worthwhile — as long as you can repay the loan on time. 

Can you get an interest-free loan?

You may be able to get an interest-free loan. Requirements vary based on the loan type — and some borrowers may not be eligible. In some cases, no-interest loans have introductory offers that provide 0% APR for a set period.

You may find this type of financing on auto loans from a dealer, but you typically need a good credit score to qualify. Plus, auto financing offers often vary by model and may change based on manufacturer and dealer incentives, so 0% APR financing isn’t always available.

If you turn to a cash advance app for quick funds before your next paycheck, your credit scores may be less important because cash advance lenders might not check your credit. However, you typically need a checking account with a positive balance and a steady paycheck to show you can repay what you borrow.

Some buy-now, pay-later lenders perform a soft credit check to review your credit health. If you want to make a purchase with a buy-now, pay-later app, you’ll need to have a linked checking account, credit card or debit card to repay what you borrow.

When is a no-interest loan a good idea?

No-interest loans may be a good alternative to high-cost payday loans when you’re strapped for cash or want to pay off a large purchase over time. But there are a few things to know before getting one.

• Fees. No-interest loans may have fees attached to them, increasing the amount you have to repay. You can avoid some fees — including late, failed payment and express payment fees — by planning ahead. Others, such as potential subscription fees, can’t be avoided.
• Deferred interest. Introductory financing that promises 0% APR for a specific amount of time often comes with deferred interest. Interest accrues on your monthly balance, but the lender waives it during the promotional period. You avoid paying interest if you pay your balance in full before the promo period ends. If you don’t, or pay late or miss a payment, you’ll be responsible for all the interest accrued during the promotional period.
• Repayment timeline. No-interest loans often have short repayment terms.
• Impact on your credit. Some lenders that offer no-interest loans report missed payments to the credit bureaus, which can negatively affect your credit.

Alternatives to no-interest loans

If you’re not sure if a no-interest loan is right for you, here are some similar options that may work better for you. 

• 0% APR credit card — You can use it to buy what you need and pay for it over time. You’ll avoid paying interest if you pay on time and have a $0 balance when the promotional period expires. If not, you’ll likely be charged interest on the remaining balance. 
• Secured personal loan — Secured personal loans often offer lower interest rates than unsecured personal loans since your loan would be backed by collateral. But make sure you’ll be able to pay off your loan on time or else you’ll risk losing your collateral. 
• Payday alternative loan — Some federal credit unions offer payday alternative loans that have capped interest rates. While the interest rates are higher than zero interest loans, you may have more time to pay off your loan with a payday alternative loan. This could make it easier to ensure you’ll be able to pay off your loan by the end of the repayment period.

Our methodology: How we pick the best personal loans

Credit Karma’s editors evaluate the best personal loans by reviewing key features of dozens of popular lenders. Those features fall into three important categories:

• Affordability: We start by checking if a lender’s rates are competitive: are they higher than average or are they lower than many competitors? From there, we analyze if fees — particularly an origination fee — may make your loan more unaffordable. Last, we’ll check if the lender offers rate discounts for items such as automatic payments that may reduce your rate.
• Customer-friendly features: Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, do they offer a wide range of loan amounts for people with different borrowing needs? Do they offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can they fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
• Transparency: We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.

FAQs about zero interest loans

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.