Have you felt the financial pinch of COVID-19? Taking out an interest-free or low-interest loan may be an option for you.
Rather than falling into the trap of payday loans that come with extremely high interest rates and high fees, or accumulating debt on your credit card, interest free or low interest loan repayments are often more affordable. They benefit from zero (or minimal) fees and charges.
Remember that there are eligibility criteria and restrictions on using these loans. They are designed to support Australians who need them for essentials, not to fund something like a home improvement. If you need a little more flexibility in how you can use a loan, an Personal loan may be a better option.
So where can you get these types of loans? Let’s break it down.
Have you ever heard of an interest free loan? A Interest Free Loan Program (NILS) is an interest-free loan program offered by GoodShepherd Microfinance in partnership with the Australian government and the NAB.
Under NILS, Australians can borrow up to $ 1,500 to pay for essential items such as household items (refrigerators, washing machines, furniture, etc.), medical procedures and dental services, essentials for education and repairs or registration of cars.
The terms of the loans are relatively short, between 12 and 18 months and there are no interest, fees and charges attached to them. There is also no credit check on applicants.
Although the NILS has yet to include a specific COVID-19 relief program, it will be available soon according to Good Shepherd Microfinance. Until then, Australians can still apply for an existing NILS loan.
To be eligible for an existing NILS loan, you must:
- Have a health insurance card / pension card OR earn less than $ 45,000 per year after tax ($ 60,000 for couples or people with dependents)
- Have lived at your current or previous address for at least 3 months
- Be able to prove that you can repay the loan
To find out how to apply, see the NILS website.
When it comes to getting a low interest personal loan, several options are available to you: apply to a bank or take out a StepUp loan.
Currently on the Mozo database, the lowest unsecured variable personal loan rate is 4.85% (5.71% comparison rate *) offered by Australian Mutual Bank (excluding special loans). However, this low rate is only available to customers with excellent credit and may increase if your credit history is not good.
Alternatively, if you have a low income and are struggling to get a loan from the bank, you may be eligible for a StepUp loan offered by GoodShepherd Microfinance and supported by NAB.
With a low fixed rate of 5.99% (5.99% comparison rate *), applicants can borrow between $ 800 and $ 3,000, with up to three years to pay it off. In addition, there are also no fees attached to the loan. Remember that a credit check is required when applying for this type of loan.
Like the NILS, the StepUp Loan is designed to finance things like furniture, appliances, computers, used cars and repairs, job training, and medical expenses. They cannot be used for cash, debt consolidation, vacations, or bills.
To be eligible for a StepUp loan, you must:
- Have a health insurance card / pension card OR receive family tax allowance A
- Reside in your current accommodation for more than three months
For a full description of how to apply, go to StepUp loan site.
IMPORTANT NOTE: If you are already struggling with debt, taking out another loan may not be the best option for you. Instead, you might consider a debt consolidation loan or if you need further assistance you can always call the National Debt Helpline on 1800 007 007.
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If you want to take out a personal loan from the bank, take a look at some great loan options below! Or jump on our comparative table of personal loans for more.
^ See information on the Mozo Experts Choice Personal Loan Awards
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