NILS Loans: What are no interest loans?

Finance Journalist · 24 August 2020
The No Interest Loans Scheme (NILS) was established to provide low-income individuals and families with access to affordable credit.

What is the No Interest Loan Scheme?

NILS provides loans up to $1,500 that can be used to purchase essential goods and services such as fridges, car repairs and some medical procedures. NILS loans have no interest, fees or charges, meaning you only repay what you borrow. The loan amount can be repaid over 12 to 18 months.

NILS is an initiative of Good Shepherd Microfinance and is offered by 170 local community organisations across Australia. According to Good Shepherd Microfinance, the scheme has reached 205,000 people in Australia and has provided people with an average loan of $904.


Who is eligible for a no interest loan?

To be eligible for a NILS loan you must:

  • Have a Health Care Card/Pensioner Card or earn less than $45,000 a 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 that you can repay the loan. According to NILS provider Anglicare, this will be based on your budget and the documentation you have provided.

What can no interest loans be used for?

According to the NILS website, you can use NILS loans for:

  • Household items such as fridges, washing machines, TVs and furniture
  • Some medical procedures and dental services
  • Education essentials such as computers and textbooks
  • Car repairs or registration
  • Some other items as requested

You can’t use NILS loans for:

  • Food
  • Rent
  • Bills
  • Cash
  • Debts

NILS loans are not cash loans. If you are approved for a loan, the NILS provider will generally pay the supplier for the good or service you need directly, or give you a cheque addressed to the supplier.

How do I apply for a no interest loan?

If you are eligible for a no interest loan, the next step is to contact your nearest NILS provider to arrange an appointment. You can view a list of NILS providers on the NILS website or by calling 13 NILS (13 64 57).

At the appointment, your provider can help you with your application and work out your repayments. Once you have had your appointment and provided all the necessary documentation, your application will be assessed.

There are no credit checks during the application process. This means you won’t be refused a NILS loan if you have a bad credit history. However, you will need to show that you can afford to repay the loan and meet your current financial commitments (such as paying your current bills and any debts).

Good Shepherd is also offering Household Relief Loans Without Interest for people who have been financially impacted by COVID-19. Loans up to $3,000 are available to put towards rent and utilities. This is repayable over 24 months.

Having trouble paying bills?

NILS has helped many Australians in need of assistance. However, it’s worth remembering that you will need to make regular payments as set out in your repayment plan. According to Anglicare, a fortnightly repayment is usually between $20 to $116 depending on how much you borrow and how long your repayment period is. For example, if you borrow $500 and repay it over 12 months (26 fortnights) the approximate fortnightly payment would be $20. If you borrow $1,500 and repay it over six months (12 fortnights) the approximate fortnightly payment would be $116. Repayments are set up at an affordable amount over 12 to 18 months.

If you’re struggling to pay bills and basic necessities as it is, it’s important to consider whether you will reasonably be able to cover the repayments of the loan. Ensuring your budget is up to date may help you track expenses. Canstar has a Budget Planner Calculator that’s freely available. You might also want to speak to a financial counsellor for help. You can get free financial counselling by calling the National Debt Helpline on 1800 007 007.

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This article was reviewed by our Sub-Editor Jacqueline Belesky and Finance Editor Sean Callery before it was updated as part of our fact-checking process

Main image source: Mangostar (Shutterstock).

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