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4 Types of Low Income Loans: Pros and Cons

Small low income loan help
Do you need a low income loan in Australia? Depending on several factors, you could have one or more options for finding the right loan for your income level and ability to repay.

Before you get started, you should figure out:

  • How much you need to borrow
  • Your current income and expenses
  • Your ideal monthly repayment cost
  • Term of loan best suited for your financial needs
  • Your credit score

Armed with this information, you’ll know right away if you potentially meet the criteria for the below types of loans.


A popular, mainstream option, banks offer personal loans and repayment plans. Private lending may be an easy solution for you, especially if you have a decent credit score or a positive repayment history.

  • Pros: Banks can usually tell you right away whether you’re approved for the loan. Paying off a private loan in a timely manner can boost your credit.
  • Cons: You need a reasonable credit score, plus you may incur a high interest rate.

Some private lenders, like NAB (National Australia Bank) commit to providing loans specifically to low-income borrowers. You can learn more here.

NILS (No Interest Loan Scheme

If you’re a low income earner, you could qualify for NILS. NILS loans exist to make sure low income earners don’t get left behind when it comes to necessities.

  • Pros: No interest is the biggest draw for NILS; if you have your paperwork together, the process goes pretty quickly.
  • Cons: You can only use NILS loans for certain items (immediate household needs, auto repairs, healthcare) and you can only borrow up to $1,200. The list of qualifications is pretty long, too: you need to have a pensioner card or qualify for Centrelink already.

Specialist Lenders

Specialist lenders often work specifically with those who have poor credit. You need to meet some stringent criteria to apply, but generally poor credit won’t hurt you here:

  • Income of at least $600/week (but Centrelink cannot be your only source of income)
  • Bank account in good standing
  • 18 or more years of age.

There are also positives and negatives to borrowing from specialist lenders:

  • Pros: Bad credit? That’s not a problem. Also, the loans are unsecured. That means you can use the money however you want – there’s no difficult approval process.
  • Cons: The income requirement is a bit high, and you’re limited to $5,000.

Borrow From Family or Friends

If you’re fortunate enough to have friends or family with spare cash, you can borrow from them. Doing so requires a great deal of trust, and you could really damage your personal relationships if you fail to pay back the loan.

  • Pros: Most friends and family will loan you money with a flexible payment plan and low or no interest.
  • Cons: It’ll affect your personal relationships, even if you pay the loan back promptly. Remember: friends and family are your support and safety net!

Needing money fast – especially when you’re on a tight budget – is never a fun situation to find yourself in. However, there are options out there. Which will work best for you?

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