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Loans with no interest attached

Loans with no interest attached

If you’re looking for the best low interest loan, and find yourself wondering “why are personal loan rates so high?”, your options may be limited by your credit history. Low interest personal loans aren’t always available to bad credit borrowers, and interest free personal loans are rare in Australia. However, for Australians in significant financial stress, personal loans with no interest attached are available.

What is a no-interest loan?

The No Interest Loan Scheme (NILS) was first established in 1981 by youth workers from the Good Shepherd Sisters, and in 2012, Good Shepherd Microfinance was established to maintain and grow NILS. Having positively impacted the lives of over 400,000 people, Good Shepherd Microfinance aims to reach 1 million people by 2018.

Where can I get a no-interest loan?

NILS is offered at 671 locations across Australia, and is supported by more than 260 accredited providers, the Australian Government Department of Social Services (DSS), the National Australia Bank, and State Governments.

no interest loan

How can I use a no-interest loan?

NILS is a no interest small loan that can be used to borrow up to $1500. While there are no credit checks, NILS loans can only be used to pay for essential goods and services such as:

  • Household items such as furniture, fridges, washing machines, stoves, dryers, freezers and heaters
  • Medical and dental services
  • Educational essentials such as laptops, tablets and text books
  • Car repairs and tyres

How do I get a no-interest loan?

To apply for a NILS personal loan, you will need:

  • A healthcare or pension card and/or a low income ($45,000 per year for individuals or $60,000 per year for joint applicants)
  • To have lived in your current residence for three months or more
  • To be willing and able to repay the loan

If you qualify for a NILS personal loan, you can apply by taking the following steps:

  1. Enquire online or by phone to discuss your situation and what you’ll need to apply
  2. Meet with a local NILS provider, bringing your documentation with you
  3. Your application is assessed
  4. You are informed of your loan application’s outcome and agree on repayment terms.

Repayments are set up at an affordable amount over 12 to 18 months. Because repaying a NILS loan makes these funds available to somebody else (a process called Circular Community Credit), the repayment rate for NILS loans is 95 to 97 per cent.

Other low-interest personal loan options:

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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