An "interest free loan" would be considered by IRS as the "foregone interest" being a GIFT by the person providing you the pay-off amount. This may or may not be an issue for the donor. The donor will have the obligation to file a Form 709 Gift Tax return if the total amount of foregone interest in a given year amounts to more than $16,000 (in 2022; $17,000 in 2023) if you are the sole beneficiary of the gifted interest-free loan. You on the other hand, if it is truly a gifted interest-free loan, would not be receiving any taxable income actual or imputed. The donor should seek advice on the imputed interest percentage on the gifted amount, with the lowest % being that published and available with a monthly calculation: "Applicable Federal Rates"
See also: IRS Tax Rules for Imputed Interest
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