No-cost LoanFinancial Dictionary -> Loans -> No-cost Loan
The term No-cost Loan
is often used as marketing hype, but generally refers to a loan agreement where the lender
is the one that pays for any fees
, such as insurance
fees, credit reports
etc. It is promoted as a package where you simply get your loan
and don't have to worry about the cost of anything else; however it is often the case that rates are higher to cover the costs the lender is supposedly covering out of the kindness of their hearts. So in truth the only thing you are gaining is the peace of mind of not having to worry about sorting through all the fee payments.
No cost loans
are usually more suitable for those that have the means to simply pay the higher rates in order not to worry about managing other costs, and for those that are beginners and cannot grasp the various fees that might be charged.
No cost loans are often used in the marketing of a lender and hyped as having some kind of added value on top of regular loans, however it is often the case that paying all your own fees turns out cheaper.