In case of commodity credits or overdraft lines or credit cards, you can often find loans with 0% THM. A 0% APR means that the debtor only has to repay the loan amount (the capital) in installments, the lender does not charge interest or other fees on the loan. That is, the loan itself is free. On the one hand, we know that free of charge, whatever our income situation, we can consume from them, because we do not have to pay for them, and on the other hand we have learned that nothing is ever free. But then, how about loans? Let’s straighten out.
The loan has a price, but it doesn’t always have to be paid
The cost of the loan is the interest rate, ie the lender charges interest because it waives a certain amount of money it gives to the debtor, and on the one hand does not use the capital on its own for a specified period of time and, on the other hand, bears the risk of receiving it. There are cases where other business, from an economic point of view, are worth a bank or business to lend to their customers free of charge. This can lead to an increase in consumption, an increase in revenues on another channel or an increase in the number of customers. In this case, we can really talk about a free loan.
Accuracy is most important when it comes to repayment
Freedom is for the debtor’s client not to pay the price of the loan, ie interest (or other fees). However, the amount of the loan must be repaid under the terms of the contract. In fact, non-contractual performance usually results in the loss of free money and, in addition, bad debts and high interest rates will result for the debtor. Thus, the loan received, which is used by the debtor to purchase a product (less often a service), has to be repaid and must have an equivalent amount at the due date.
Always consider whether you can repay the loan accurately
Here you can see the limits of free credit for borrowers. You can only borrow as much (even if the interest is 0%, that is, quasi free), as the debtor’s income conditions allow for repayment. This is the case with overdrafts or credit cards: at the end of the cycle, the amount of the loan used must be repaid. If you get a loan (or at least the product you bought from it), then you need to pay back, a monthly release that you need to cover your income. In other words, without the loan (devotion and use of the borrowed money) free of charge, the repayment of the borrowed money will cost you money. If that were not the case, that is, it would not have to be repaid, it would not be a loan but a gift. It doesn’t exist like that.
So how much can you pick up from it?
When you receive a credit offer with a 0% APR, you should consider the same as paying interest on the loan: that is, always assume the amount of income you can use to repay the loan. The bank also conducts credit appraisal of commodity credits and other similar credit products, and in these cases, also examines the JTM, that is, the portion of the income-based repayment installment, that is, how much of your income should be spent on repayment. This value should not exceed the statutory rate for that type of credit.
It can be safer, which is 0
In the case of interest-free loans, there is no need to account for an increase in the repayment installment, because the interest rate cannot change (at most if no repayment is made in due time – you can often expect very high interest rates). So, think even more rigorously than the JTM limit, the amount of monthly installment you can afford as you can pay for exactly the time and just make up the amount of credit that does not exceed that limit.