Interest-free personal loans in Australia

Rates and fees last updated on

No-interest personal loans can help Australians in financial distress by offering safe and affordable credit.

If you earn a low income, finding the money to afford even the most basic goods and services can be a difficult challenge. However, it’s this challenge that the No Interest Loan Scheme (NILS) is designed to overcome.

An initiative of Good Shepherd Microfinance, NILS provides low-income earners with access to interest-free personal loans, allowing them to access fair and affordable financing. Let’s take a closer look at the interest-free personal loans available under the scheme and how they might be able to help you.

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:

  • Have a Health Care Card or Pension Card
  • Earn less than $45,000 per year
  • Have lived at your current address for at least three months
  • Show a willingness and the capacity to repay the loan

There are no credit checks required during the loan application process. Instead, interest-free personal loans are offered on a basis of trust and respect.

Not eligible? See some alternatives

Personal loans for Centrelink applicants

What can I use an interest-free personal loan for?

NILS loans are only available for the purchase of essential household items and services, including:

  • Fridges, freezers, stoves, washing machines, dryers and some items of furniture
  • Some medical and dental services
  • Essential educational items, such as computers and textbooks
  • Some other items and services as requested

How does the lending process work?

NILS is based on a system of circular community credit. This means that when you make a repayment on your interest-free personal loan, those funds are then made available to someone else in the community.

You can apply for a NILS loan by following a few simple steps:

  1. Enquire about interest-free personal loans online through the NILS website or by phoning 13 NILS (13 64 57). This will allow you to determine whether you may be eligible for a loan.
  2. Attend an interview with a NILS loan provider in your local area.
  3. Your loan application is assessed.
  4. You are informed about the outcome of your loan application. If successful, you will then agree on repayment terms.
  5. Use the funds to pay for essential services or household items.
  6. Repay the loan amount over 12 to 18 months.

Are there any alternatives?

If you don’t meet the strict eligibility criteria necessary to qualify for a NILS loan, there are still other options available to help you access the finance you need:

  • Centrelink cash advance.If you receive Centrelink payments and you need emergency funding you can apply to have one of your payments made in advance. Contact the Department of Human Services to find out more.
  • Pension loans scheme. If you’re old enough to qualify for a pension and you hold equity in real estate, this government scheme uses the funds you have tied up in real estate as a non-taxable loan. While these loans do come with interest, the rate is significantly lower than the rates charged on other personal loans. Contact the Department of Human Services for more details.
  • Short-term loans. Short-term loans are available for people who receive Centrelink benefits, to those who are unemployed and even people with bad credit. You may also want to compare your payday loan options if you are in need of quick financing.

Have more questions about interest-free personal loans?

Can I use a NILS loan to catch up on my rent?

No, you cannot use the funds from an interest-free personal loan to pay rent.

What else can’t I use the loan amount for?

You can’t use a NILS loan to consolidate debt, pay bills or take a holiday. In fact, you can only use the funds you receive for the approved loan purpose.

Can I still qualify for an interest-free personal loan if I have a bad credit history?

Yes, there are no credit checks required during the application process for a NILS loan.

What information do I need to take along to the loan interview?

When you arrange a loan interview appointment, the loan provider will advise you what information and documentation you need to take.

Are there any application fees or monthly or annual fees attached to these loans?

No, there are no fees or charges on a NILS loan.

Who is Good Shepherd Microfinance?

Good Shepherd Microfinance is Australia’s largest microfinance provider. It provides a wide range of affordable financial programs to people who are financially excluded.

Are there any other ways I can get interest-free terms on purchases?

Yes, you may also want to consider a credit card that offers a 0% p.a. introductory rate on purchases.

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 June 29th, 2017
Name Product Product Description Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Interest Free Period Interest Saved
ANZ Platinum Credit Card - Exclusive Offer
Includes complimentary overseas medical and travel insurance and the ability to use Apple Pay and Android Pay.
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)
Up to 55 days on purchases
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Earn 0.66 Velocity Rewards points per $1 on purchases and receive a $129 Virgin Australia Gift Voucher each year.
0% p.a. for 12 months (reverts to 20.74% p.a.)
0% p.a. for 6 months
$129 p.a.
Up to 44 days on purchases

Compare up to 4 providers

Was this content helpful to you? No  Yes

Related Posts

RateSetter Personal Loan

Ratesetter allow you to get a personalised rate based on your credit score.

Citi Personal Loan Plus

Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% p.a.

CUA Discount Variable Personal Loan (Loans over $30,000)

Apply for a loan over $30,000 and enjoy a discounted interest rate

MyState Unsecured Personal Loan

Apply for up to $50,000 and make additional repayments without penalty.

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the privacy policy, receive follow up emails related to and to create a user account where further replies to your questions will be sent.

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.



Ask a question