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Loan Types
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Interest-free personal loans in Australia
0% interest personal loans offer safe and affordable credit to help Australians in financial distress.
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If you earn a low income, finding the money to afford even the most basic goods and services can be difficult. Luckily, there are a number of interest-free finance options available. These include the No Interest Loan Scheme (NILS), interest-free finance packages on appliances and various other finance options.
Find out if you're eligible and compare your options below.
What's in this guide?
What are interest-free personal loans?
Interest-free personal loans are unlike standard personal loans in that they require no interest payments on top of repaying the principal of the loan amount. With regular personal loans, you can use the funds for almost any legitimate purchase. You can finance a car or even apply for a boat loan. Personal loans for weddings or holiday loans are available too.
With interest-free personal loans, how you can use the funds is much more limited. These loans are usually only available for the purchase of essential household items and services.
The most common type of interest-free personal loan in Australia is the No Interest Loans (NILS) scheme offered by Good Shepherd Finance, a not-for-profit community-led organisation committed to providing affordable finance for Australians in need.
No Interest Loans (NILS) Coronavirus Relief
In collaboration with the Australian Government and National Australia Bank not-for-profit organisation Good Shepherd Microfinance is launching Household Relief Loans Without Interest for people impacted financially by coronavirus, aka COVID-19.
The interest-free loans are available up to $1,500 on terms of up to 18 months, and there are no credit checks involved in the application process. Funds from the loans are intended to for household products and utilities such as electricity bills - something standard NILS are not available for.
If you've been struggling financially as a result of COVID-19 and you have come to the end of your hardship assistance with your landlord or utility provider, a Household Relief Loan could help. For further information on NILS loans, please call 1300 770 550.
What are No Interest Loans (NILS)?
No Interest Loans are designed to provide low-income earners with access to interest-free personal loans, helping them get fair and affordable financing.
The eligibility criteria for NILS is also much more stringent than that of regular personal loans as these loans are intended for people facing financial difficulties. Therefore, applicants must prove that they are in need of these loans in order to be eligible.
Am I eligible for NILS?
You need to meet a few criteria to be eligible for NILS:
- Have a Health Care Card or Pension Card
- Earn less than $45,000 per year after tax ($60,000 for couples or people with dependants)
- Have lived at your current or previous 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.
How do NILS work?
These loans are offered by Good Shepherd Microfinance and are part of NILS. These interest-free personal loans are available up to $1,500, and let you purchase essential items 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 12-18 months to pay back the principal loan amount.
What can I use NILS for? | What can't I use NILS for? |
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How does the NILS lending process work?
The lending process is based on a system of circular community credit. This means 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:
- 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.
- Attend an interview with a NILS loan provider in your local area.
- Your loan application is assessed.
- You're informed about the outcome of your loan application. If successful, you'll then agree on repayment terms.
- Use the funds to pay for essential services or household items.
- Repay the loan amount over 12-18 months.
What other interest-free loans are available?
If you don't meet the strict eligibility criteria necessary to qualify for NILS, there are still other options available to help you access the finance you need:
0% interest financing from retailers
Some retailers offer interest-free periods on the sale of their goods and appliances. For example, The Good Guys offer up to 60 months interest-free on home appliance purchases with a minimum spend in-store or online.
StepUP Loans
StepUP Loans are the product of a partnership between Good Shepherd Finance and NAB. While not strictly "interest-free", StepUP Loans are low interest personal loans available from $800 to $3,000 designed mainly to help people on low-incomes finance cars and car repairs. However, some loans can also be used to fund various necessary household items.
Centrelink cash advance
If you receive Centrelink payments and 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.
Personal loans for Centrelink applicants
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'll need good credit in order to be eligible.
Frequently asked questions about No Interest Personal Loans (NILS)
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Ask an Expert
Our refrigerator is on the blink and we cannot repair it,
We need to buy a new one ASAP I am on a disability pension with my wife as my carer We have very little cash flow and savings but we own our house outright
Wots are our options of getting a low interest pension loan
Hi Raymond,
Thanks for getting in touch! Our page shows the list of providers who may accept your application. As it says on our page:
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.
Hope this helps!
Best,
Nikki
Hi,
Can I get a home loan if I am on disability pension?
Hi Maryam,
Thank you for getting in touch with Finder.
Since some lenders accept Centrelink benefits as your sole source of income, all you need is to do some research or look for a mortgage broker to help you on getting a home loan. You may use our Centrelink home loan guide for your application.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
Can I borrow to buy a car I’m on centrelink benefits and I work. If so what is the most I could borrow ?
Hi Lisa,
Thanks for leaving a question on Finder.
If you’re looking to purchase a car, you can consider a secured car loan from a lender that accepted Centrelink applicants. You can purchase a new or used car and use it as security for the loan to get a lower rate. You can learn more about the types of loans available to Centrelink recipients.
Please send me a message if you need anything else. :)
Cheers,
Joel
Tanya
Need help fill in
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,
Elizabeth
I am on DSP pension. Can i get a air conditioner interest free?
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.
Thanks,
Elizabeth