No Interest Loans Explained: What to Check Before Applying

When something you rely on breaks and the money isn't there, the quickest offers tend to be the ones that add to the price. NILs is slower and asks more questions, and most of those questions are about your budget.

What a No Interest Loan is

Good Shepherd runs NILs nationally, and local community organisations take the applications. You apply for one specific essential and bring a quote for it. If the loan is approved, the money goes straight to the shop or service provider, never to you as cash. You then repay it in fortnightly amounts agreed with the provider.

So it isn't free money: every dollar comes back out of your future pays. If you've used buy now pay later, equal repayments over time will look familiar. With NILs, the provider works through your budget with you before agreeing the repayment.

What it can pay for

Most loans are for essentials you'd struggle to go without: a fridge or washing machine, a laptop for study or work, car repairs, furniture, or medical, dental and vet costs. Each kind of loan has its own limit.

A bond loan covers the bond on a new rental, not the rent itself. If you're still adding up what a move costs, our guide to moving out of home lists the rest. Loans for buying a car are a separate product with a credit check and terms of up to 48 months, so this guide sticks to the everyday kind.

What it won't pay for

NILs can't be used for cash, rent payments, existing debts, everyday bills like electricity, gas and water, groceries, petrol, holidays, council rates or fines.

Those are often the costs pressing hardest, so this can feel like a door closing. For a bill or debt you can't pay, start with the business you owe; our guide to asking for hardship help walks through what to ask for.

Who can apply

You may be eligible if at least one of these applies to you:

• You have a Health Care Card or Pension Card.
• You earn less than $70,000 a year before tax as a single person.
• You earn less than $100,000 before tax and have a partner or dependants.
• You've experienced family or domestic violence in the last 10 years.

These are alternatives, so you don't need a concession card if your income is under the limit. Alongside one of them, you'll need to be 18 or over, to have lived at your current address for at least three months and to show you can afford the repayments. If you've moved recently or your housing is unsettled, ask a provider anyway, because exceptions are made in some cases. Meeting the criteria means you can apply; the provider decides whether the loan is approved.

The appointment is about your budget

You apply in a face-to-face or phone appointment with a local provider. The official NILs site has a provider finder, or you can call 13 64 57 (13 NILS). Applying through that site or a listed provider helps you avoid unrelated loan ads.

The worker goes through what comes in, what goes out and any debts you already have, including buy now pay later, payday loans and rent-to-buy agreements. It isn't a test of how good you are with money. It's how they set a repayment you can keep up.

To apply, you'll need:

• 100 points of ID, such as a driver's licence, passport or Medicare card, with one item showing your address
• recent payslips or Centrelink statements, and bank statements or banking details
• an estimate of your regular expenses and the details of any debts
• a quote or invoice with the date, the item or service, the supplier's details, payment details and the total including delivery

Statements are enough here; nobody in the process needs your banking password. The expenses estimate is easier with real numbers than guesses. Clova, our budgeting app, puts each purchase in a category, so a few weeks of food and transport spending are there to read off when the worker asks.

Check the repayment fits your lightest fortnight

Nadia, who's made up, is 21 and studying with a few casual shifts a week. Her laptop died mid-semester, and the replacement her course needs is quoted at $1,200 including delivery. Her provider agrees a repayment of $50 a fortnight over 24 fortnights.

That's 48 weeks of repayments, so Nadia is still paying for the laptop most of a year later. Before agreeing, Nadia can check $50 fits her lightest fortnight, the one with fewer shifts or a bill landing, not just an ordinary one.

Repayments usually come out each fortnight through Centrepay, direct debit or a direct deposit, timed with your pay or Centrelink payment. If the amount suggested won't fit, say so in the appointment rather than hoping it will. A cheaper option for the same need can change the answer. If nothing fits because the whole budget is stretched, a free financial counsellor can look at all of it with you.

When the last repayment is made

The fortnight after your final repayment has $50 it didn't have for nearly a year. You can keep some going into an emergency fund, so the next thing that breaks starts with money already there rather than another application.

A note from us

Needing to borrow for an essential shouldn't make the essential cost more. Clova shows what's left until payday with the repayment already counted, so a fortnight that's getting too tight shows up while there's still time to call your provider.