An interest-free loan means that the borrowers will only pay back the exact amount they borrowed from the lender, without any interest. However, in most cases, some of these loans need you to have a very strong credit record before you can access it. Whereas many people think there are no banks offering no-interest loans, the truth is there are banks offering interest–free loans in Nigeria.
Majority of these banks function under Islamic banking ethics. Government of Nigeria, sometimes offers free-interest loans. You can check out list of Federal Government free-interest loans.
However, here we will cover all that you need to know about interest-free loans in Nigeria.
Interest Free Loans in Nigeria
Islamic Banking (No-Interest Banking), otherwise known as sharia-compliant finance, is a type of banking that find its root in the laws of sharia.
The main fundamental principles of this type of banking are the exclusion of interest collection from customers and sharing of profit and loss.
Sharia frowns against any form of speculation or involvement gambling. Furthermore, it prohibits the collection of interest on loans. This condition makes the Islamic Banking system different from the conventional Banking system.
Where can I get Interest-Free Loans in Nigeria?
Below are where to get free-interest loans in Nigeria:
1. Jaiz Bank
Jaiz bank is a financial institute that operates according to Islamic banking ideologies. It is a public and national cited organization with more than 26,000 investors. The objective of Jaiz Bank is to be the unique leader in the areas of ethical Banking in the Sub-Saharan region.
Additionally, as anticipated of a bank operating under Islamic principles, Jaiz Bank offers Non-interest loans to its customers. These loan choices are generally available to all and sundry at zero interest rate, but, definitely with a loan duration called repayment period. Some of these loan choices are:
- Murabaha (Household Equipment)
The Household equipment loan is a purchaser product loan. If an individual is looking to purchase some household essentials, this loan option got you covered. This could include a Television set, Refrigerator, laptop computer, etc. The repayment of this loan is for 2years.
- Project Financing
Say, an individual has a big project but lack the capital strength required to execute it, such person can approach Jaiz Bank. The bank will agree to complete the project and sell it to you at a cost-plus profit margin.
Other loan preferences available with Jaiz Bank are: Lease to own and Working capital Financing. Visit the bank’s official website www.jaizbankplc.com to learn more.
2. TAJ Bank
Like Jaiz Bank, TAJ Bank mainly operates under the sharia financial belief. This means they don’t receive interest and they don’t give either. They bank has 3 branches in Nigeria providing regular services like the conventional banks. The bank operates ATM services, online and mobile transactions, etc. Their head office is in Abuja, and a further branch in Kano. Their loan options include:
- Cost plus Working Capital (Murabaha):
This loan option was designed to help people finance the purchase of raw materials and the assets they desire. All you need to do is to source for the asset or raw material, and when you do, the bank will pay the supplier of the asset after which TAJ bank expects you to repay at a date agreed upon, on a cost-plus profit basis.
- Bonds and Guarantees: (Kafalah)
TAJ bank largely designed this loan option for organizations that need to give their trading partner or clients a guarantee.
- Cost Plus SME Finance:
This funding product helps to meet the financial needs of Small and medium-sized enterprises. If your business under this category then, this loan option is for you. TAJ bank put people in this category into cooperative clusters and fund their capital needs.
It may interest you to note that in Nigeria today, only banks operating under Islamic banking philosophies are the only ones offering no-interest loans. You can visit their official website to learn more about their loan offerings or visit any of their branches near you.