Interest-free means no interest. Under normal circumstances, banks or other financial institutions will charge a certain interest if they borrow funds through credit activities according to certain interest rates, repay the principal and interest on time and other conditions. However, if banks and other financial institutions give borrowers interest-free treatment, it means that borrowers only need to repay the principal on time without paying other interest.

There is an interest-free situation.

1. After the creditor's loan to the debtor is exempted, its interest will also be exempted. For example, the Central Committee of the Communist Party of China and the State Council once issued a regulation: "Credit sales, advance receipts, advance payment for goods and agricultural loans owed by rural commune teams to the state shall be exempted without repayment." With the exemption issued by the national government like this, the borrower can no longer repay the principal or interest according to the law;

2. If the creditor requires the debtor to repay only the principal of the loan, the loan interest may be exempted. Interest-free has a strong historical and policy nature. In recent years, with the acceleration of the commercialization of banks, the interest-free policy has been rarely used. Starting from 1 August, 9961,no unit or individual except the State Council has the right to decide interest-free. Therefore, some private loans are often interest-free, but later loan disputes are prone to occur, which leads to the delay in the realization of creditor's rights.