Listen to a Business English Dialogue About Non interest bearing note
Eva: Hi Quinn, have you heard about non-interest bearing notes in finance?
Quinn: Yes, I have. Non-interest bearing notes are promissory notes that do not accrue interest over time.
Eva: That’s correct. Why would someone use a non-interest bearing note instead of a traditional loan?
Quinn: Someone might use a non-interest bearing note to facilitate a transaction where the borrower doesn’t want to pay interest or where interest isn’t applicable, such as in certain business agreements or family loans.
Eva: I see. Are there any disadvantages to using a non-interest bearing note?
Quinn: One potential disadvantage is that the lender doesn’t earn any interest income on the loan, which could impact their overall return on investment.
Eva: Got it. How are non-interest bearing notes typically repaid?
Quinn: Non-interest bearing notes are usually repaid in a lump sum at the end of the term, without any periodic interest payments along the way.
Eva: Thanks for explaining, Quinn. Non-interest bearing notes seem like a simple way to structure certain financial transactions.
Quinn: You’re welcome, Eva. They can be useful in certain situations where traditional loan terms don’t apply or aren’t desired.