Arch's deferred interest loans let you take out a loan with no monthly interest payments. Instead, interest accrues over the loan term and is settled when your loan matures or rolls over. Here's how it works.
How does it work?
With a deferred interest loan:
No monthly payments are due during the loan term.
Interest accrues each month based on your outstanding principal balance, but is not billed.
At the end of your term, you can roll over your loan and the accrued interest will be added to the principal of your new loan, or pay off the loan in full and settle the accrued interest with your final statement.
Each monthly statement will show an Amount Due of $0.
Deferred interest is offered for terms up to 12 months.
Deferred interest loans carry a slightly higher interest rate than standard monthly-pay loans to account for deferring payments to the end of the term. The exact rate will be displayed when you select deferred interest during loan configuration.
How to choose deferred interest
When configuring a new loan, you'll see deferred interest as an option on the loan configuration screen. Selecting it will update the displayed interest rate to reflect the deferred interest rate, and you'll see a note confirming that no payment is due until maturity.
On the loan details confirmation screen (right before signing your loan docs), you'll see a confirmation that you've chosen to defer interest and that no payment is due until maturity. Your loan documents will reflect the same.
What deferred interest looks like on your loan dashboard
Overview tab
Under the Loan Agreement section, your loan will be labeled as a Deferred Interest loan. In place of "Total Interest Paid", you'll see Interest Accrued, which reflects the running total of interest that has accumulated and will be settled when your loan matures.
Statements tab
Each monthly statement will show the interest that accrued during the period and an Amount Due of $0. Statements are also annotated to indicate that this is a deferred interest loan.
Email notifications
Because no payment is due each month, we don't send monthly statement emails for deferred interest loans. You will receive your final statement at maturity, which shows the total interest accrued. If you roll over, this accrued interest is added to the principal of your new loan.
Common Questions
Why is the interest rate higher for deferred interest loans?
Because you're deferring your interest payments to the end of the term rather than paying monthly, the interest rate is set slightly higher than a comparable standard loan to account for that.
Can I make payments during my loan term anyway?
Yes. Any payment you send during your term will be applied directly to your outstanding principal, which reduces the balance that interest accrues against going forward.
Can I pay off my deferred interest loan early?
Yes. If you pay down your full principal balance before the end of the term, your next statement will mature the loan and bill any remaining accrued interest. You can always find an up to date view of payoff progress under the Loan Details tab, including how much is needed to pay off your loan today.
What happens at the end of my deferred interest loan?
At maturity you have two options:
Roll over your loan. Your accrued interest is added to the principal of your new loan, and a new term begins. You can choose to continue with deferred interest or switch to a standard monthly-pay loan.
Pay off your loan. Your final statement will bill the full accrued interest along with your remaining principal.
Can I switch a standard loan into a deferred interest loan?
Yes, you can switch into deferred interest when you roll your loan over. You cannot switch into deferred interest when upsizing an existing loan.
Can I switch a deferred interest loan back to a standard loan?
Yes. When you roll over, you can choose to move to a standard monthly-pay loan. Your accrued interest will be added to the principal of the new loan as part of the rollover.
Will I receive monthly statement emails?
No. Since there is no payment due each month, we don't send monthly statement emails for deferred interest loans. You will receive your final statement email at maturity.
Does deferred interest change how my collateral works?
No. LTV monitoring, margin calls, and the ability to top up collateral all work the same as a standard Arch loan. Reach out via the Intercom chat widget if you'd like to talk through your specific situation.