Interest-free personal loans in Australia

Rates and Fees verified correct on March 26th, 2017

Depending on your circumstances, you may be eligible for a no-interest personal loan.

Families on small fixed incomes or in financial distress have the option of applying for an interest-free personal loan in Australia. This type of lending is for small amounts only but can be very useful for when a sudden emergency arises.

An interest-free personal loan is a small loan between $300 and $1,200 that is available to individuals and families who meet certain criteria. With this type of financing, you're only responsible for paying back the principal balance on the amount borrowed.

How does an interest-free personal loan work?

These loans are offered by Good Shepherd Microfinance and are part of the No Interest Loans Scheme (NILS). These interest-free personal loans let you purchase essential items that you may not be otherwise able to afford.

Community organisations work with Good Shepherd and are able to provide this type of loan to impoverished families by having a set amount of funding available. As one borrower is paying off their loan, those funds are being allocated to another needy family. There are no fees or interest charges to worry about and each recipient is given 12 to 18 months to pay back the principal loan amount.

Are you eligible for interest-free personal loans?

You need to meet a few criteria to be eligible for an interest-free personal loan:

  • You need to hold a health care card or pension card or be on a low income
  • You must have been residing in your current residence for at least three months
  • You need to show a willingness and a capacity to repay the loan

Not eligible? See some alternatives

Personal loans for Centrelink applicants

Key features of these loans

  • Purpose. These loans are only available for necessary purchases. The lender will make sure that you have no other alternative before approving the application. Examples include household items like fridges and freezers, some medical and dental services, education essentials such as computers and text  books and some other items.
  • Loan amount. You can apply for a loan between $300 and $1,200. If you are after a higher loan amount, Good Shepherd also offers a low-interest StepUP loan with NAB where you can borrow up to $3,000.
  • Repayments. You are still responsible for making timely repayments on this loan. Check out the terms and repayment options available to make sure that you will be able to abide by them.

Weighing up the benefits and drawbacks

  • Alternative to payday loans. If you find yourself in need of funds and aren't eligible for traditional credit, no interest loans are an option to consider.
  • No fees. There is no fee to apply and you will not be subjected to any monthly or annual fees for your loan.
  • No interest. No interest is applied to the balance of your loan.
  • Eligibility criteria. There is strict eligibility criteria that needs to be met in order to be approved for one of these loans.
  • Restrictions on loan purpose. There are strict rules regarding what the borrowed money may be used for.

What are some of the risks?

  • Unauthorised purchases. These loans are designed for very specific purposes. Don’t use the funds to buy something that has not been approved.
  • Default. The money you borrow comes from a fixed account that is used to help underprivileged families across the country. By not paying it back, you could be depriving another family of a necessity.

I'm not eligible for an interest-free personal loan. What are my options?

If you do not meet the eligibility criteria for a no-interest loan you still have options available to you:

  • Centrelink cash advance. If you receive Centrelink payments and you need emergency funding you can apply to have one of your payments brought forward. Get in touch with the Department of Human Services to find out more.
  • Pension loans scheme. If you are of pension age and hold equity in real estate this is another option to consider. While the loan come with interest the rate is significantly lower than is charged by other personal loans. The scheme is offered by the Department of Human Services.
  • Short-term loans. These loans are available to those who receive Centrelink benefits, to those who are unemployed, or to those with bad credit. Even if you are just in need of quick financing you can compare your payday loan options and find a loan that might work for you.

How else can I get interest-free terms on purchases?

A range of credit cards offer 0% introductory rates on purchases. Compare a range of these products below, but keep in mind you will need good credit in order to be eligible.

Rates last updated March 26th, 2017
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
St.George Vertigo Visa
Introductory offer of 0% p.a. for 12 months on balance transfers and 0% p.a. for 6 months on purchases, plus a low annual fee.
0% p.a. for 6 months (reverts to 13.24% p.a.) 0% p.a. for 12 months $55 p.a. Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months. Also, enjoy an annual fee waiver in the first year.
0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Earn Velocity Rewards points with your purchases and pay no interest with 0% p.a. for 12 months on purchases and 0% p.a. for 6 months on balance transfers.
0% p.a. for 12 months (reverts to 20.74% p.a.) 0% p.a. for 6 months $129 p.a. Go to site More info
St.George Vertigo Platinum
A platinum card with a balance transfer offer of 0% p.a. for 12 months and an introductory purchase offer of 0% p.a. for 6 months.
0% p.a. for 6 months (reverts to 12.74% p.a.) 0% p.a. for 12 months $99 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 12 months and 0% p.a. for up to 6 months on purchases.
0% p.a. for 6 months (reverts to 13.24% p.a.) 0% p.a. for 12 months $55 p.a. Go to site More info
Westpac Altitude Card
Enjoy a balance transfer offer of 0% p.a. for 12 months and 0% p.a. on purchases for 6 months.
0% p.a. for 6 months (reverts to 20.24% p.a.) 0% p.a. for 12 months $100 p.a. Go to site More info
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4 Responses to Interest-free personal loans in Australia

  1. Default Gravatar
    Tanya | April 1, 2016

    Need help fill in

    • Staff
      Elizabeth | April 1, 2016

      Hi Tanya,

      If you’re looking for assistance with your application you’ll need to get in contact with Good Shepherd Microfinance directly. I’ve emailed you its contact information.

      Hope this will help,


  2. Default Gravatar
    stephen | January 8, 2016

    I am on DSP pension. Can i get a air conditioner interest free?

    • Staff
      Elizabeth | January 11, 2016

      Hi Stephen,

      If you’re considering applying for a Good Shepherd Finance loan you can visit its website and review the eligibility criteria. An air conditioner may be considered to be an eligible household item, but its best to get in touch to find out.

      I hope this has helped.



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