Zoom Finance Blog
What Is the Difference Between a Bad Credit Loan and a Hardship Loan?
At Zoom Car Loans, we help everyday Australians find the right finance options when life throws financial curveballs.
Many people come to us confused about the difference between a bad credit loan and a hardship loan.
While both options are designed to assist people in difficult financial situations, they serve different purposes and come with different conditions.
Let’s break it down so you can better understand which one might suit your needs.
What Is a Bad Credit Loan?
A bad credit loan is a type of loan offered to individuals who have a poor credit history or low credit score. This may include people who have:
- Missed repayments in the past
- Been bankrupt or entered into a debt agreement
- Defaults or judgments listed on their credit file
These loans are specifically designed to help people rebuild their financial standing while still accessing funds for a car, personal expenses, business needs, or even debt consolidation.
At Zoom Car Loans, we work with a panel of understanding lenders who are willing to assess your current situation—not just your past.
Key features of a bad credit loan:
- Offered by non-bank or specialist lenders
- May come with higher interest rates to reflect the perceived risk
- Can be secured (using a car or asset) or unsecured
- Suitable for those actively working to rebuild their credit profile
We often help customers find bad credit loans when they’ve been rejected by traditional banks. These loans can be a helpful stepping stone to get back on track financially.
What Is a Hardship Loan?
A hardship loan is usually a temporary arrangement designed to help people who are currently experiencing financial hardship—often due to unexpected events like:
- Job loss
- Illness or injury
- Natural disasters
- Relationship breakdown
Hardship loans are often offered by banks or existing lenders when a borrower is unable to meet their usual repayments. Rather than being a new loan, it may involve altering an existing loan contract—for example, pausing repayments, reducing the repayment amount, or restructuring the loan for a short period of time.
Key features of a hardship loan:
- Usually negotiated with an existing lender
- Not a long-term solution—designed to provide breathing room
- Often requires formal proof of hardship
- Aimed at helping you avoid default or falling further behind
Unlike a bad credit loan, a hardship loan doesn’t usually involve new borrowing—it’s more about modifying what you already owe.
So, What’s the Difference?
In short:
- Bad credit loans are new loans for people with a poor credit history who still need access to finance.
- Hardship loans are support measures for existing loans, designed to help during a tough period.
At Zoom Car Loans, we specialise in helping people find the right bad credit loan to suit their current situation—even if the banks have said no.
If you’re unsure which option is best for your circumstances, get in touch with our friendly team. We’re here to help you move forward, not judge your past.
