If you are looking for an interest free loan, your options will be limited. Most interest free lending services come in the form of balance transfers for a set period of time. Others include an interest free period when purchasing from a retailer or vehicle dealership, etc.
Most interest free loans are tied to some sort of promotion from finance companies or retailers. If you are looking for an unsecure loan without interest, options will be very limited.
There are interest free loans in Australia
The most popular interest free loan in Australia is the No Interest Loan Scheme (NILS) which is designed for low income earners or those dealing with serious financial issues. This is not a loan designed for purchasing entertainment type of goods or services (vacations, flat screen tv, etc).
The NILS loan is designed to help Australians who need assistance with important household needs such as:
– Whitegoods such as a new stove, fridge, washer/dryer, computer, bed, etc
– Health related goods such as a wheelchair, asthma pump, walker, etc
– Car repairs for those who can prove the importance and reliance of a vehicle vs public transport
– Other unique circumstances related to the home and having minimal living standards met
What are the terms of an interest free loan?
To qualify for a no interest loan, you must meet the following minimal requirements:
– You must be on or qualify for Centrelink or the pensioner card.
– You must show that you can make the repayments within a 12 to 18 month period
– You need to be able to prove you have been living in the same residence for at least 3 months
– Different NILS offices may have slightly different approval criteria.
*If you do not meet the above requirements, there are other programs which you may qualify for. Whilst they may not offer zero interest, they have very low fixed rates with no fees – see Stepup loans here or below.
What is the process for applying?
If you meet the above criteria, you can borrow up to $1200 and in addition to now interest attached to the loan, there are no fees. Applying is as follows:
– Enquire at your nearest branch
– Go through a quick interview process
– Your application/interview goes through assessment
– You are approved
– You receive payment
– You start making your low monthly repayments
Another great loan option is StepUp
StepUp is slightly different than NILS in that it has a low fixed interest rate attached to it but borrowers can receive a larger sum of money and there are no fees attached to it.
Who can apply to StepUp?
This loan is also for individuals and families on a low income and that qualify for or are currently on Centrelink. Borrowers must be holding a Centrelink Concession Card or be receiving Family Tax Benefit Part A and be able to prove they have lived at the same home for at least 3 months.
How much can I borrow with StepUp?
With StepUp, borrowers can receive between $800 and $3000 dollars and the repayment period can be up to 3 years. As mentioned before, StepUp comes with a low fixed rate and no fees.
What can I purchase with the money?
These loans are designed to help borrowers purchase items that are important to the household or for everyday living. Items can include whitegoods similar to those outlined in NILS as well as used car purchase or repairs to the home – Essentially items necessary for running a household and not for entertainment.
Important – Borrowing situations
If you are currently experience serious financial difficulties and need money to pay for food, utilities or other serious circumstances, you may be better off contacting Centrelink for an Advance Payment or reach out to a free financial counsellor to get help controlling your finances and talk to your creditors on your behalf.
Whilst applying for an interest free loan may sound like a good solution to help with cash flow issues, it may just be a band aid solution which can lead to further debt and worst financial problems.