What Is a Medical Loan?
A medical loan is a type of personal loan that’s used to pay for medical care. Sometimes, health insurance won’t cover the complete cost for surgeries, elective medical procedures, and other related costs.
Medical loans are offered by banks and other lenders and can be secured or unsecured.
When is a Medical Loan a Good Idea?
Medical loans might be a good idea if you need money quickly to cover a medical expense and don’t want to use a credit card. Medical loans may have lower APRs than a credit card and let you borrow a higher amount.
For example, if you need to pay for a procedure that could cost several thousand dollars, a surgery done with new medical equipment, or you got billed for a hospital stay, a medical loan can come in handy. That way, you can pay off your bills and out-of-pocket expenses.
Here are some other situations where a medical loan might be a good idea for your financial situation:
- Urgent bills from medical emergencies
- Infertility treatment such as in vitro fertilization (IVF)
- Hair loss, hair restoration
- Surgeries
- Dialysis, chemotherapy and other medical procedures
- Long-term care such as physical therapy or rehabilitation
- Dental procedures, veneers, and dental surgeries
- Cosmetic surgeries and weightloss procedures
The benefit of using a medical loan is that you can have one predictable monthly payment that’s usually at a fixed interest rate. This takes the stress out of wondering how you’re going to pay for medical expenses and can help you avoid bills going to collections
When is a Medical Loan a Bad Idea?
Medical loans are not always a good idea. It all depends on factors like your financial situation, credit profile, desired repayment timeline, and more. Here are some situations where a medical loan may actually be a bad idea.
- You don’t meet the credit or income requirements. There are medical loans for bad credit. However, there’s no guarantee you’ll get approved. If you don’t meet the income or credit requirements, this should serve as a caution that a medical loan for your situation is not the best idea.
- Interest and fees can significantly increase costs: Some medical loans can be costly if you have a high interest rate or monthly payment. There’s also added fees like the origination fee to consider as well. Medical loans don’t reduce the cost of your medical expenses. So you’ll need to pay back the loan plus extra over time so decide if you can truly afford this.
- You need more time to pay off the loan: Most medical loans allow you 3 to 5 years to pay back the debt. However, if that’s not enough time, you may need to consider other options.
How to Get a Medical Loan?
Getting a medical loan is similar to applying for a personal loan. Here are some steps you’ll need to follow.
- Get prequalified or get an initial quote: Lots of lenders allow you to fill out a short form online to either receive a quote or get prequalified for a medical loan. This allows you to submit some basic information and preview loan terms and options. Sometimes, the form may ask for your social security number but double-check to make sure it’s just a soft credit pull at this point.
- Consider the terms and compare options: After you have a good idea of what you’ll qualify for, consider those terms and compare options. This is the perfect time to shop around to see who’s offering the best APR, decide the repayment term you need, and consider which fees you’ll be responsible for.
- Submit an application: After you’ve done your due diligence, it’s time to formally submit an application. You’ll need to enter your personal information such as your address, employer, income, social security number, and desired purpose for the loan funds.
- Upload any necessary supporting documents: Once your application is submitted, it will be processed and the lender may request additional documentation. This is where you may be asked to submit pay stubs, bank statements, proof of address and so on to validate your application details.
- Accept loan terms and receive funding: If you are approved for a loan, you’ll be asked to sign a document acknowledging that you accept the specific loan terms. Once you’ve accepted the loan terms, you’ll receive the funds. Some lenders provide funds in as little as one business day while it may take a few days for others to transfer the money.
Alternatives to Medical Loans
A medical loan isn’t always the best solution for everyone. It’s important to consider alternative options as well. Before you agree to pay a medical bill, it’s important to check the charges for accuracy since billing mistakes happen all the time. You wouldn’t want to take out a loan to pay for medical expenses that you aren’t even responsible for.
If the bill is accurate, ask about payment plan options. Some medical offices offer payment plans to help you pay for your medical bills overtime. Depending on your income, you may also be able to qualify for financial assistance. Using a payment plan gives you consistent monthly payments but without the added interest and fees that often come with a medical loan.
Another option is to sign up for a medical credit card. If you have good credit, you may be able to lock in a 0% APR for several months allowing you to pay off your medical bills interest-free.
How to Lower a Medical Bill?
Before considering medical financing, it’s important to explore ways to lower your medical bills as well. Healthcare providers offer programs and options to help relieve the burden of medical debt.
Oftentimes, all you need to do is ask about these options. Here are a few ideas to help you lower your medical bills.
- Ask if there’s a financial assistance program. Hospitals and medical providers often have programs that can reprice and lower your medical bills if you are facing a financial hardship. Usually, these programs require you to fill out an application and provide proof of income.
- Review your insurance coverage. It’s a tedious task but it could save you quite a bit of money. If your insurance doesn’t cover a medical expense that is included in your coverage summary, you can discuss this with them and possibly get your bill reduced.
- Negotiate medical bills. Medical costs can be negotiated. If you don’t have insurance or are unable to make payments, see if there’s a patient advocate you can speak with to negotiate the bill to an amount that’s reasonable for you.
Conclusion
Medical loans can come in handy when you need money to cover medical costs fast and prefer fixed monthly payments. There is no one-size-fit-all medical loan option for everyone, but our carefully researched list of best medical loans can certainly help.
Get clear on your reasons for choosing a medical loan and which terms you’re looking for. Also, be sure to prequalify first so you can preview and compare your options early on.