Zero interest financing might sound good but it also has its own downsides. This might cause some troubles with the loans you have. In order to avoid these things, you need to know how zero interest financing works by reading the things below.
1. Zero Interest Financing is designed for specific customers
Only a limited number of individuals are able to qualify for a zero interest financing. Lending institutions provide tough rules in selecting those who can avail this type of loan. A pre-requisite requirement for this is the above average capability. Only 5% of the total number of applicants gets to qualify on this. In addition to this, applicants should also possess a credit score of 750 or high better.
2. Zero interest financing has shorter pay-back period
This type of financing is offered with shorter pay-back period requirement. This is because the 0% interest set-up requires that the payment obligations must be completed within a period with 2 years as the maximum. This is the main reason why this kind of loan prioritizes above average income earners. High income earners are most likely capable of paying the loan