Interest-free Personal Loans

Good Shepherd's No Interest Loans (NILs) give you a way to borrow up to $3,000 without having to pay any interest. You can use it to pay for essential goods and services, as well as some housing costs and expenses related to natural disasters.

To be eligible for NILs, you need to earn less than $70,000 before tax as a single person or less than $100,000 before tax as a couple. You're also eligible if you have a Health Care Card or Pension Card. You will also need to demonstrate that you can afford to repay the loan.

What is an interest-free personal loan?

As the name suggests, no interest is charged for an interest-free personal loan. Interest is the fee you're charged by the lender for borrowing money. In this case, you are required to only repay the amount borrowed. With standard personal loans, lenders charge interest on top of the loan amount.

The most common type of interest-free personal loan in Australia is Good Shepherd's No Interest Loans (NILs). Good Shepherd is a not-for-profit community-led organisation committed to providing affordable finance for Australians in need. It has a dedicated No Interest Loans team you can call on 13 64 57.

With a regular personal loan, you can use the funds for almost any legitimate purchase. You can use it to finance a car, a wedding or holiday, or just about anything you wish. With interest-free personal loans, how you can use the funds is comparatively limited. These loans are usually only available for the purchase of essential household items and services.

What is NILs?

This is a no-interest loan designed to provide low-income earners access to safe, fair and affordable funding. No interest or fees are charged. If you're looking for income relief, you should consider this loan before opting for any other form of expensive credit.

It is offered by around 500 providers across Australia.

The eligibility criteria for NILs is different from that of a regular personal loan. This is because these loans are intended for people facing financial difficulties and who have low-incomes. You will have to prove that you're in need of these loans to be eligible.

How does NILs work and what can I use it for?

Around 500 providers work with Good Shepherd to provide NILs to families in need of credit assistance. The basic premise is that as one borrower pays off their loan, those funds are then allocated to another borrower in need. This is called "circular community credit".

As we mentioned above, NILs comes with restrictions on usage. We've outlined what you can and can't use the loan for:

• Household items and essentials like fridges, stoves and washing machines
• Household furniture and repairs
• Car repairs and registration
• Medical or dental expenses
• Wellbeing and life event expenses
• Education essentials like laptops and books
• Employment expenses like licences and registrations
• Bond and rent in advance
• Rates
• Costs associated with a natural disaster

• Food
• Bills
• Debts
• Cash

Am I eligible for NILS?

To be eligible for NILS, you need to:

• Earn less than $70,000 a year before tax as an individual, or $100,000 if you have a partner or children

OR

• Or have a Health Care Card or Pension Card
• Or have experienced domestic violence in the past 10 years
• Show that you can repay the loan

Does applying for NILS impact my credit score?

No credit checks are performed when applying for NILS. This means that your score will not be impacted. Additionally, if you have bad credit, you can still qualify for the loan so long as you can prove it can be repaid.

How can I apply for NILS?

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

1. Check if you're eligible.
2. Find the nearest NILS provider either online or by calling 13 64 57.
3. Set an appointment with the provider selected.
4. Submit your paperwork.
5. Wait for your application to be assessed.
6. You will receive the outcome by phone or email.

Are there other interest-free loans available?

If you don't qualify for NILS, there are other options available:

• 0% interest financing from retailers
  Some retailers offer interest-free periods on the sale of their goods and appliances. For instance, The Good Guys offers up to 60 months interest-free on home appliance purchases with a minimum spend in-store or online.
• Centrelink cash advance
  This allows you to receive an advance payment on your Centrelink benefits. This is not an additional payment, but a part of your existing allowance paid in advance. You may be eligible depending on how long you have been with Centrelink and how much you receive. You can contact the Department of Human Services for more details.
• Buy now pay later
  Buy now pay later allows you to buy an item or a service and pay for it in instalments. No interest is charged during the stipulated period. There are also buy now pay later services that let you pay your bills in instalments.

There are also a few low-interest options available. These include:

• StepUp Loans
  If your income is small, you could be eligible for a StepUP personal loan. This program is managed by Good Shepherd Microfinance in partnership with NAB. With this loan, you could borrow between $800 and $3,000, with a loan term of up to 3 years. The interest rate is fixed at 5.99% p.a.
• Pension loans scheme
  If you qualify for a pension and hold equity in real estate, this government scheme uses the funds tied up in real estate as a non-taxable loan. The rate offered is significantly lower than the rates charged on other personal loans. You can contact the Department of Human Services for more details.

Personal loans for Centrelink applicants

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

There are a range of credit cards which offer 0% introductory rates on purchases. You can compare a range of these products below. Keep in mind that you'll need good credit to be eligible.

Why compare personal loans with Finder?

Addicted to details. We know taking out a personal loan is something you'll be hooked up with for a while. That's why we put hours into research for this guide (and still do at least once a month)

Rates obsessed. Lenders come in all shapes and sizes, that's why we don't just track the big banks, but all the digi folk too. Pretty much everyone but your parents to be honest.

Cash for whatever you need. Lending rates verified from 180+ products day and night. Whether you're buying a car, rennovating your home or heck just ready to let loose with the spending - we got you.

Frequently asked questions

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

  No, you cannot use the funds from NILS to pay rent.

• What else can't I use the loan funds for?

  You can't use a NILS loan to consolidate debt, pay bills or take a holiday. You can only use the loan funds for the approved loan purpose.

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

  Yes. Your credit score will not be checked or taken into consideration when you apply for a NILS loan.

• What information do I need to take along to a loan interview?

  When you arrange for an interview, the loan provider will advise you on the documentation and the information you will need to take.

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

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

• What 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 find themselves excluded from traditional credit services.

Written by

Matt Corke

Head of Publishing Ventures

Matt Corke is Finder’s head of publishing ventures. Prior to this he was head of publishing for Australia, New Zealand and emerging markets. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates. See full bio

Co-written by

Amy Bradney-George

Editor

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio

Amy's expertise

Amy has written 565 Finder guides across topics including:

• Credit cards
• Frequent flyer
• Credit score
• BNPL
• Money management
• Sustainability