How an interest-free loan works
With no interest, each repayment is the amount divided by the number of months. A fee means you pay more than you borrowed, so the APR (FCA CONC App 1.2) is above 0%.
Worked example
£1,200 over 12 months is £100 a month. Against a loan at 20% APR you save £122.74 of interest. With a £50 fee the APR is 8.23% and the saving drops to £72.74.
Where 0% loans come from
Employers' season ticket loans, retailers' 0% finance and loans from family are common. 0% credit cards and purchase deals usually revert to a high rate after the offer, so clear the balance in time.
What this calculator assumes
Equal monthly repayments and any fee paid at the start. Lenders may round repayments to pennies with a final adjusting payment.
Borrowing in the US?
The country choices above the inputs open separate local pages. In the US, 0% APR financing often means giving up a cash rebate, so the US page compares the two. Choosing United States opens that page and resets the inputs; amounts are not converted.
For the US version, use the US zero interest loan calculator in US dollars.
Inputs for the UK interest free loan calculator
Amount borrowed
How much you're borrowing at 0%, in pounds.
Term
How many monthly repayments.
Upfront fee
Any arrangement fee. Enter 0 if none.
Compare with a loan at
The APR you'd otherwise pay, such as a credit card's.
CALCULATOR QUESTIONS
UK interest free loan calculator questions
How do I work out repayments on an interest-free loan?
Divide the amount by the number of months. £1,200 over 12 months is £100 a month.
Is an interest-free loan really free?
Only if there are no fees and you repay on time. A fee gives it an APR above 0%.
What happens if I miss a payment?
You may lose the 0% rate or pay a charge, so check the agreement.
Does a 0% loan affect my credit score?
A 0% loan from a lender, such as retail finance, shows on your credit file like any credit, and missed payments hurt your score. A loan from family or your employer usually won't appear.