Low-interest loans that won’t make things worse

Low-interest loans, what are they? As a student or someone living on a presumably low-income, this could be an option for you. Forget credit cards, family borrowings and store cards, have you considered no or low-interest loans?

When the car breaks down and needs a major repair. Or your laptop dies, and you need it for work. Or the fridge, washing machine or freezer packs it in. I’m sure you’ve heard before how bad credit cards are. But for most people, the first reaction is put it on the credit card. There are no other options, right?

Plus, how can you resist when you see the ads saying 48 months interest-free at your local electrical goods retailer. It all seems so easy. Until it isn’t. 

With all good intentions, these cards often don’t get paid back as quick as you convince yourself hence why you didn’t have savings in the first place {need budgeting help? try this one}. Or on the interest-free card, you miss one payment, and it can end up VERY costly when the penalties and other interest charges kick in.

So what are your options?

Get that store card with the enticing interest-free offer? Nope. It won’t be that pretty when your interest rate spikes to more like 30%, right? 

Payday lenders? NO WAY they are worse than credit cards.

A traditional credit card? Harder to obtain AND with immediate interest and temptations, ummm no. 

Borrow from family. We all know that never ends well. 

Now what?

That is where low-interest lending comes in, often run by not-for-profits and recommended by a financial counsellor on the National Debt Hotline as a fair and reasonable alternative to the suggestions above. The thing is, most people don’t know they even exist.

In the last week, I found out about a little company called Good Shepherd MicroFinance. They offer two types of finance (that I know of) that may come in handy depending on your situation.

One is a No Interest Loan Scheme {NILS} which, as the names suggest, incurs no interest. To qualify for this one you need to;

• Have a health care card/pension card
• Reside in your current premises for more than three months
• Show a willingness and capacity to repay
• This one seems to run via your local St Vincent De Paul or Salvation Army.

This offer is so good it is obviously going to be limited to what it can be spent on, right? Good news is things like appliances (fridge, laptop etc.) and car expenses are fine. They do make it clear you cannot use this funding for bills, rent or holidays with this financing.

The other is StepUp which offers low-interest loans. They are currently sitting at 5.99%pa with a comparison rate of the same 5.99% meaning NO FEES.

To qualify for this low-interest loan;

• Have a Health Care Card/Pension Card, or receive Family Tax Benefit A
• Reside in your current premises for more than three months

For those, a little worried about visiting a local charity the good news is this one seems to be an online application, and when it comes to signing and providing proof of income etc. you visit your local NAB branch.

This one is limited to things like appliances, car-related expenses but also they mention on their website Vocational education and medical expenses.

No or Low-Interest Loans, are they for you?

If you meet the criteria for either of the above low-interest loans, it is worth looking into. The information came from a financial counsellor on the national debt helpline.

To finish let’s be clear I have never had either of these loans. This is not a sponsored post and I don’t work for them. This post was written because I could think of a few things that went on credit card which would have been paid off in half the time had I known about these low-interest loans. The more you know, right? 

Share this with your friends who you think it might help.

 

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Tags: BUDGETING, LENDING, LOANS, LOW INCOME, LOW-INTEREST LOANS, MONEY