Medical loans and debt is one major problem in the U.S. with the rising costs of health care and restrictions on health insurance coverage, many people are left with no choice but to borrow money to pay for medical care when it comes to certain procedures or situations.
Although insurance will cover lots of procedures, deductibles are often high, and it may not cover the entire cost.
In 2017, U.S. households spent $980 billion on health care — with an average of more than $3,200 per person, according to the Centers for Medicare and Medicaid Services.
If you have medical costs you can not afford to pay, medical loans could provide the funds you need. Find out how to get a medical loan below.
What Is a Medical Loan?
Medical loans are personal loans that can be taken to finance medical procedures, medical debt reconciliations, optional surgical procedures, out of network charges or other medically related costs which are not covered by your health insurance.
What Are the Advantages of a Medical Loan?
According to the Patient Advocacy Foundation, medical bills are the number one reason people are filing for bankruptcy in the US.
Having a medical loan that helps you to handle your healthcare costs on a payment schedule can be a big step in helping you pay for medical services and avoiding the stress of worrying about payments or struggling to pay off procedures in one shot.
Advantages of Taking Out a Medical Loan:
- You might be able to get the funds for your procedures much faster than if you waited for insurance to decide whether something is covered or not.
- Unsecured medical loans do not necessarily need you to have collateral
- A medical loan may not impact the credit utilization ratio on your credit history.
- Medical loans may in some cases offer you better finance options & rates than financing through the medical service provider.
- Use money from your medical loan to cover or pay for other medically related expenses (for instance additional living expenses during your recovery and treatment).
5 Situations Medical Loans Can Help With
Medical loans can be used to cover different medical costs which may not be fully covered by insurance, here are some common medical procedures and situations that a medical loan might help with:
1. Cosmetic surgery
2. Fertility treatments
4. Weight loss related surgery, for example, bariatric procedures
5. Consolidating Medical Debt
How medical loans work
In most situations, a medical loan is simply an unsecured personal loan used to pay for medical care. Medical loans usually has a few key features that make them an ideal choice for financing medical care:
- Fixed loan amounts: With a medical loan, you are borrowed a fixed amount of money upfront and do not get access to more cash as you pay down the loan, which will help you control your overall costs of borrowing.
- Fixed repayment terms: Medical loans have a set repayment schedule so you will know how long it will take to get out of debt.
- Lower interest rates than credit cards: As of August 2019, while the average credit card interest rate is 16.97%, you can usually find a medical loan with a lower rate, especially if you have great credit.
- Fast funding: Most times, medical loan lenders release funds quickly after approval.
Medical loan options
Though you don’t have to take out a specific “medical loan,” there are plenty of companies offering personal loans that can be used for medical expenses.
Here are some companies that offer medical loans.
- American Medical Loan
- OneMain Financial
- LightStream Medical Loan
American Medical Loan
- Borrow up to $40,000
- Apply online and get a quick decision and fast access to financing
- Qualify even with bad credit
- Loans can be used to cover all types of medical expenses
- Borrow between $1,500 and $20,000
- Apply online and get a quick decision and fast access to loan funds — in some cases, by the same business day if you’re approved by noon
- Fixed interest rates and no prepayment penalties
- APRs from 18.00% to 35.99%
- Choose from a repayment term of 24, 36, 48, or 60 months
LightStream Medical Loan
- APRs as low as 5.95% with autopay
- Borrow between $5,000 and $100,000
- Fixed interest rate and no origination fees or prepayment penalties
- Loan terms from 24 – 84 months
- Excellent credit required
Summary of medical loans to cover health care expenses
|American Medical Loan
|Up to $40,000
|3 or 5 years
|18.00% – 35.99%
|$1,500 – $20,000
|24, 36, 48, or 60 months
|LightStream Medical Loan
|5.95% – 16.79%
|$5,000 – $100,000
|24 – 84 months
How to compare medical loans
When you’re shopping for medical loans, it’s a good idea to get quotes from multiple lenders to ensure you find the best personal loan for your needs. Below are some of the key factors you’ll want to compare.
- APR: You’ll want to look for the lowest possible APR when taking out a medical loan because it can help lower your monthly payments and total costs of borrowing.
- Origination fees: Origination fees are upfront fees you pay to get a loan. Sometimes, the amount of the origination fee is added to your loan balance; it can also be deducted from your loan proceeds. Not all lenders charge these fees.
- Application requirements: You’ll want to pay attention to what a successful application requires from each lender. For example, some lenders restrict their loans only to people with excellent credit scores, while others, when evaluating an application, look beyond imperfect credit. When you can’t qualify for a loan on your own, most lenders often require you to have a cosigner.
- Loan terms: Pay attention to the loan amount, type of interest rate, repayment period, and additional fees. You should always look at the big picture to make sure you’re getting monthly payments you can afford with a loan that provides the funds you need.
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Alternatives to medical loans
Although medical loans can be a good way to pay for medical expenses, they aren’t the only option. Below are some other sources of financing.
If you already have a credit card, it could be much faster and easier to use to pay for medical care than getting a personal loan or medical loan accepted.
Though, the interest you pay will be higher if you are not able to qualify for a 0 percent APR credit card that allows you to repay interest-free transactions as long as they are paid off within a specified period of time, such as 12 months. Typically, such credit cards require good credit.
Medical credit cards
Many credit cards are specifically intended for health support. For example, CareCredit is a credit card that you can use to offset the premium to pay for insurance-free treatments and procedures. It also offers deferred-interest funding for transactions of $200 or more for up to 18 months.
If you are going this route, make sure the credit card is approved by your bank— and compare the rates and conditions with other credit cards for general purposes to see if you are really getting a good deal.
In case of borrower default, secured loans are loans that need collateral to reduce the risk to the lender.
Secured loans can be easier to qualify for than unsecured loans — but you risk losing whatever collateral you make if you are unable to make payments in the process.
Looking for more procedure-specific medical loans?
Medical loans can help you afford many kinds of care that either aren’t covered by insurance or come with high deductibles and coinsurance costs.
If you are interested in more procedure-specific medical loans, you can find additional resources below:
- Dental loans
- Personal loans for plastic or cosmetic surgery
- Personal loans for treatment centers and rehab
- IVF loans
- Hip replacement surgery loans
- Breast augmentation cost and financing options
- Tummy tuck cost and financing options
You may want to consider consolidating medical debt to save on interest and simplify repayment if you end up with multiple medical loans.