• A deferred interest loan postpones interest payments until a certain period of time has elapsed.
  • If the loan is not repaid within the specified period, interest begins to accrue.
  • Interest paid can sometimes be backdated to the entire balance of the loan and include high interest rates.
  • Loans with deferred interest are usually issued by credit cards or offered by retailers.
  • Mortgage loans may also include deferred interest options, where unpaid interest is added to the principal balance of the loan, also known as negative amortization.
  • As a rule, loans with deferred interest rates are not considered a financially reasonable means of financing.