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Published May 22, 2024
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No Interest Loans (NILs) Explained

The No Interest Loans Scheme allows some Australians to borrow up to $3,000 with an interest-free loan.

There are a range of lenders that advertise no-interest loans on the internet, but the only true interest-free loan offered in Australia and New Zealand is the No Interest Loans Scheme. This program was started in 1981 by the Good Shepherd, one of Australia’s oldest charities. 

In partnership with local community organisations, Good Shepherd provides no-interest loans (NILs) for low-income earners struggling to cover an unexpected expense.

What is a no-interest loan?

A no-interest loan is one that does not charge interest on the borrowed funds

While some types of loans, such as payday loans, may advertise ‘zero interest’, they typically charge fees, sometimes as high as 20% of the amount borrowed. 

NILs offered through the Good Shepherd program do not charge interest or fees, making them cheaper than payday and bank loans. Borrowers only need to pay back what they borrow, which makes these loans appealing to people on a tight budget.

Eligible borrowers can use NIL to pay for various expenses, from car repairs and household essentials to medical and dental services. You can’t use this type of loan for cash, bills or debts.

No-interest loans in New Zealand

If you live in New Zealand, you may be able to borrow up to $7,000 through a no-interest ‘Good Loan’ for things like car repairs and medical expenses. Plus, you can get up to $15,000 for repaying debts. Visit the Good Shepherd’s New Zealand website for more information. 

» MORE: What is an emergency fund?

How a no-interest loan works

You’ll need to apply through an accredited provider to get a NILs. If approved, the provider will pay the vendor directly for the goods or services you need. When you apply, you typically need to submit an invoice for the item or service that the loan aims to cover. 

Repayments are typically arranged for up to 24 months. Repayment windows may be longer depending on the provider.  

As borrowers repay their NILs, the funds become available to someone else in the community; this is known as the ‘circular community credit’ concept.

How much can you borrow?

You can borrow up to $2,000 on a no-interest loan for essentials, such as:

  • household items
  • car repairs and expenses
  • medical expenses
  • technology items
  • education expenses
  • employment expenses.

Alternatively, you can borrow up to $3,000 for certain rental expenses, council rates and natural disasters. 

Important: The NILs for Vehicles program — which previously offered up to $5,000 to help purchase vehicles — is not currently accepting new applications.


There are no credit checks, but you must meet certain requirements to be considered for NILs.

  • Have either:
    • a Healthcare Card or a Pension Card
    • earn less than $70,000 gross annual income as an individual or $100,000 as a couple or person with dependants, or
    • have experienced family or domestic violence within the past ten years.

In addition, you must also show the capacity and willingness to repay the loan within the required timeframe. Age and residency requirements may apply. 

🤓 Nerdy Tip

Since you’re only repaying the purchase price of the goods or services you need, your total repayment will likely be cheaper than financing items (in the case of goods) or getting a cash loan to buy them.

How to get a no-interest loan

Gather as many documents as you can prior to applying. You’ll likely need the following items, according to the Good Shepherd website:

  • identification, such as a driver’s license 
  • financial documents, such as bank statements and payslips
  • estimates of your current expenses 
  • information on current debts 
  • a quote or invoice for the item or service you are getting the loan for.

Pre-approvals may be available if you haven’t yet landed on a specific item or service.  

NILs providers

Good Shepherd works with 170 local community organisations to provide NILs to those in need. Use their website to find a community service provider near you.

Application process

There are a couple of ways to get started on the application process.

You can call the Good Shepherd No Interest Loan Team on 13 64 57 or contact them online through the Good Shepherd website. Alternatively, you can directly contact your local community service provider to arrange a meeting.

The meeting will allow you to ask questions and to let the community organisation work out what you can afford to repay. As part of the application process, NILs providers might look at your finances more broadly to see if other services might assist you[1].

How long does approval take?

It can take up to a week for the application to be assessed, depending on the provider. Some might grant approval quickly, giving you access to the item or service you are buying within a few days.

Once approval is finalised, the payment goes directly to the vendor or supplier — you won’t receive any money in your bank account.

Other types of financial support available

If you need emergency relief, Ask Izzy is a free and anonymous service you can use to find support for meals, housing, healthcare, counselling, legal advice and more.

If you are a student, the Higher Education Loan Program (HELP) provides interest-free loans from the Australian government to eligible students. These loans are interest-free and are indexed annually to keep values in line with changes to the cost of living.

Article Sources

Works Cited
  1. National Debt Helpline, “No Interest Loans,” accessed May 20, 2024.

Frequently asked questions

Is a credit check required for a no-interest loan?

A credit check is not required for Good Shepherd no-interest loans.

Can you use a no-interest loan for education?

Yes, NILs can be used for materials required for education purposes, but they won’t likely be enough to cover tuition fees.


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