Felt the financial pinch of COVID-19? Taking out a no interest or low interest loan may be an option for you.
Rather than falling into the trap of payday loans which come with extremely high interest rates and hefty fees, or racking up debt on your credit card, no or low interest loan repayments are often more affordable. They have the benefit of no (or minimal) fees and charges.
Just bear in mind, there are eligibility criteria and restrictions on what you can use these loans on. They are designed to support Aussies that need them for essential items, not to fund something like a home renovation. If you need a little more flexibility in what you can use a loan for, a personal loan may be a better option.
So where can you get these types of loans? Let’s break it down.
No interest loans
Ever heard of a loan that charges no interest at all? A No Interest Loan Scheme (NILS) is an interest-free loan program offered by GoodShepherd Microfinance in partnership with the Australian Government and NAB.
Under the NILS, Aussies can borrow up to $1,500 to pay for essentials like household items (fridges, washing machines, furniture etc.), medical procedures and dental services, education essentials, and car repairs or registration.
Loans terms are relatively short, between 12 months and 18 months and there is no interest, or fees and charges attached to them as well. There are also no credit checks conducted on applicants.
While the NILS is yet to include a COVID-19 specific relief package, it will be available soon according to Good Shepherd Microfinance. In the meantime, Aussies can still apply for an existing NILS loan.
To be eligible for an existing NILS loan you must:
- Have a Health Care Card/Pension Card OR earn less than $45,000 per year after tax ($60,000 for couples or individuals with dependants)
- Have lived in your current or previous address for at least 3 months
- Be able to prove you can pay back the loan
For information on how to apply, check out the NILS website.
When it comes to getting a low interest personal loan, there are a couple of options available: applying through a bank or taking out a StepUp loan.
Currently on the Mozo database, the lowest unsecured variable personal loan rate sits at 4.85% (5.71% comparison rate*) offered by Australian Mutual Bank (excluding special purpose loans). However, this low rate is only available to customers with excellent credit, and can spike if your credit history isn’t great.
Alternatively, if you are on a low income and struggling to get a loan from the bank, you may qualify 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. Plus, there are also no fees attached to the loan. Just bear in mind, a credit check is required when you apply for this type of loan.
Like the NILS, the StepUp loan is designed to fund things like furniture, appliances, computers, second-hand cars and repairs, vocational education and medical expenses. They cannot be used for cash, debt consolidation, holidays or bills.
To qualify for a StepUp loan you must:
- Have a Health Care Card/ Pension Card OR receive Family Tax Benefit A
- Reside in your current home for more than three months
For a full breakdown of how to apply, jump over to the StepUp loan website.
IMPORTANT NOTE: If you are already struggling with debt, taking out another loan may not be the best option for you. Instead, you could consider a debt consolidation loan or if you need some extra support, you can always call the National Debt Helpline on 1800 007 007.
RELATED ARTICLE: 6 tips for improving your credit rating during COVID-19
If you want to take a personal loan out from the bank, take a look at some killer lending options below! Or jump over to our personal loan comparison table for more.
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