Interest free vs Interest bearing

November 2, 2023

When it comes to home installations, finance payment options play a crucial role in helping homeowners achieve their desired improvements. Installers understand the importance of providing flexible payment plans that cater to the diverse needs of their customers. Two popular financing options are interest-free and interest-bearing plans. In this article, we will delve into the differences between interest-free and interest-bearing options and explore how they impact customers seeking finance for their home installations.

Interest Free vs. Interest Bearing: Understanding the Basics

Before we dive into the details, let's establish a clear understanding of interest-free and interest-bearing financing options.


Interest-free financing refers to a payment plan where the borrower is not charged any interest on the principal amount borrowed. Instead, the borrower pays back the borrowed amount in equal instalments over a specific period, typically ranging from 6 months to several years. This financing option provides homeowners with the benefit of spreading out the cost of their home installations without incurring additional interest charges.

Interest-Bearing Financing

On the other hand, interest-bearing financing involves charging interest on the borrowed amount. The interest rate is typically fixed or variable and is added to the principal amount, resulting in a higher total repayment. This option allows homeowners to make smaller monthly payments over an extended period, while the interest accrues over time.

How Interest-Free and Interest-Bearing Options Affect Customers

Now that we have a clear understanding of the two financing options, let's explore how they affect customers seeking financing for their home installations.

Flexibility in Budgeting

Interest-free financing provides customers with the advantage of predictable payments. With equal instalments over a specified period, homeowners can easily budget and plan their expenses without any surprises. This flexibility allows customers to make necessary home improvements without straining their finances.

Interest-bearing financing also offers budgeting flexibility, albeit with the consideration of interest charges. Customers opting for this option need to factor in the interest component when planning their budgets. While the monthly payments may be lower, the overall cost of the installation may be higher due to the interest accumulation.

Total Cost of the Installation

Interest-free financing options are popular among homeowners who prioritise minimising the overall cost of their home installations. Since no interest is charged, the total repayment amount remains the same as the principal borrowed. This enables customers to achieve their desired improvements without incurring additional expenses.

Interest-bearing financing options entail an additional cost in the form of interest charges. While customers can spread out the payments, the total amount repaid will be higher due to the added interest. It is essential for homeowners to consider the long-term implications and evaluate whether the benefits of financing outweigh the increased cost.

Qualification Requirements

Interest-free financing options are typically more accessible to a broader range of customers. Installers often collaborate with financial institutions or offer in-house financing that requires minimal documentation and credit checks. This accessibility enables homeowners with varying credit profiles to avail themselves of interest-free financing for their home installations.

Interest-bearing financing options may involve more stringent qualification requirements. Lenders offering such options often conduct thorough credit assessments to determine the borrower's creditworthiness. Customers with excellent credit scores and stable financial backgrounds may have an easier time qualifying for interest-bearing financing.


In conclusion, the choice between interest-free and interest-bearing financing options has a significant impact on home owners seeking financing for their home installations. Interest-free financing provides flexibility in budgeting, minimises the overall cost of the installation, and is accessible to a broader range of customers. On the other hand, interest-bearing financing offers lower monthly payments but comes with the consideration of additional interest charges.

Installers play a crucial role in helping homeowners navigate these financing options and make informed decisions. Here at Hiber, we specialise in streamlining the financing process to both installers and their customers. With Hiber, installers can offer their customers a wide range of finance options, including interest-free and interest-bearing plans to cater to their specific needs and financial situations.

Hiber understands the importance of simplicity and transparency when it comes to financing. our streamlined and straightforward process ensures that installers can provide their customers with hassle-free financing solutions. Whether homeowners are looking for budget flexibility or long-term cost-effectiveness, Hiber can help match them with the right financing option.

To learn more about how Hiber can assist in offering finance options for home installations, feel free to reach out to us. Call us on 0330 069 735, email us at, click here to complete a contact form. You can also use our live chat feature Monday to Friday between the hours of 9am- 5pm.