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?
- No Interest Loans (NILS) Coronavirus Relief
- What are No Interest Loans (NILS)?
- Am I eligible for NILS?
- How do NILS work?
- How does the NILS lending process work?
- What other interest-free loans are available?
- How else can I get interest-free terms on purchases?
- Frequently asked questions about No Interest Personal Loans (NILS)
What are interest-free personal loans?
Interest-free personal loans are unlike regular 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, such as cars, weddings, boats or holidays. 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?
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 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.
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)
Personal Loan OffersImportant Information*
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 7.5% p.a. and 20.49% p.a. based on your risk profile
A loan from $10,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
You'll receive a fixed rate between 7.45% p.a. and 16.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.
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