What Is a Medical Loan and How To Get One?

The majority of the US population has health insurance provided by their employer or otherwise. Yet, even if you enjoy such benefits, it’s possible to end up underinsured with medical bills you cannot repay.

A quarter of all Americans face difficulties in settling their medical bills. Even worse, almost half of US residents tend to put off or reject medical treatment due to poor personal finances. In such stressful situations, medical loans are there to help anyone cover treatment fees upfront. These financial products come with benefits and drawbacks— so they’re not suitable for every applicant.

What Is a Medical Loan?

Medical loans resemble personal loans. Yet, unlike standard financing options, these can help finance medical bills. You can use these types of loans to cover surgeries, emergencies, dental procedures, and IVF treatments. The approved amount and the loan term vary based on your credit history and income.

Medical loans can be secured and unsecured. If you opt for a secured one, you won’t need to put collateral for the sake of your health. By contrast, unsecured loans with a reasonable interest rate usually get approved to good credit scores. Borrowers must be aware of any fees and prepayment penalty that may exist.

A secured medical loan would be the ideal alternative for those with a bad credit score. If you have struggles to cover past treatments, ensure you provide proper collateral to support your debt. The downside of such trade-offs is that you may lose the pledged item or property if you cannot repay the debt. Also, secured loans involve lower interest rates and better loan terms and conditions.

How Does a Medical Loan Work?

Many lenders, including banks and online lenders like us, approve personal loans for medical treatments. The application process resembles that of applying for other types of credit. Also, medical credit requirements are flexible and may be subject to change. When choosing a loan, you should weigh the pros and cons of all medical financing options.

Applying for a medical loan can take place online or at brick-and-mortar lenders. If you want the process to go by quicker, it’s best to prequalify for a loan. It won’t affect your credit score, and you’ll learn the available terms and conditions depending on your financial standing beforehand. When you put in your official application, most lenders will run a credit check and verify your income source. You will also need to submit additional information and documents as per the lender’s requirements.

Whenever you might receive the funds varies, from a couple of hours to a week. After you receive the cash, you will have a fixed monthly payment to pay. Note that the repayment agreement includes the added interest rate.

Advantages of Medical Loans

Medical loans can be a helpful alternative when your emergency savings and income aren’t enough. Let’s look at some of the main upsides of an average medical loan.

•  Collateral isn’t mandatory: Unsecured medical loans don’t require you to pledge your car or house. Most surgery financing options shouldn’t impact your credit utilization ratio either.
•  Flexible loan terms: Most personal loans for hospital bills involve repayment periods that stretch from two to five years. Clients can select the timeframe that best suits their needs, which is a huge bonus. Here, you’ll be paying interest in the same fixed amount every month.
•  Fast funding: You’ve probably heard about patients facing hospitalization denial until they provide payment. In case of an emergency, a medical loan can help you obtain urgent care. Most lenders deposit the funds within a couple of days, so you’ll be able to settle hospital rates without delay.
•  Less expensive financing method: Using credit cards to pay for medical expenses can cost you over the odds. Hence, if you have an excellent credit history, you may find personal loans with interest rates of 6%.
•  Various uses: Medical loan funding can cater to many imminent needs. When it comes to medical-related expenses, you should be able to pay for procedures uncovered by insurance. You can also use the proceeds to cover living and travel expenses during treatment and recovery. Using them for Medical debt consolidation is also an option.

Disadvantages of Medical Loans

Although benefits may be substantial, medical loans don’t fit all financial frames. Before you decide, ensure you’re aware of the following considerations:

• High interest rates for a bad credit score: Personal loans tend to involve a lower APR than credit cards. Still, bad credit will increase the interest rates proportionally. Besides having difficulties getting approved, borrowers with poor credit may face interest rates that cap at 36%.
• One-off costs and processing fees: Generally, medical loans entail a processing fee and a one-time payment. These charges can reach 2-3% of the loan amount. Though the price may seem insignificant when an emergency presses you, fees add up quickly. Indeed, medical loans are financial boosters but always learn the available rates and terms first.
• Limited funding: Depending on your healthcare needs, specific treatments can be pretty costly. If your medical condition is complex and requires long-term treatment, a standard medical loan may not suffice. Loan amounts depend on your credit profile, but most medical credit options don’t exceed $40,000.

Coronavirus

Since many people have been gravely affected severely by the COVID-19 financial and health crisis, many customers can’t pay off their medical debt on time. Or at least they need assistance with delaying repayment. Luckily, the US Congress passed legislation that offers relief with medical debt collection. Congress has also stipulated that group health plans or issuers must cover all coronavirus testing.

The CARES Act also provides funds to uninsured patients and healthcare providers that battle against Covid-19. For more details on coronavirus relief, check out government resources at Medicare and Medicaid.

Alternatively, some applicants might consider a coronavirus hardship loan. Such personal loans aim to provide borrowers with funding for a few months to pay for medical expenses. So, if you’re undergoing financial hardship, provide a layoff notice from your employer to support your claim. You may also provide a bank statement showing that your savings account is empty.

The application for coronavirus hardship loans is fast and reliable. The best thing is that lenders offer deferred payments until you financially stand up on your feet. Frequently, you may get lower interest rates so that you can manage 36 monthly payments easily once you start repaying.

Can You Get a Medical Loan With Bad Credit?

To be eligible for an unsecured medical loan, you must provide evidence of good or excellent credit. That means your credit score has to be 670 or above to qualify. To avoid getting denied, reach out to lenders who specialize in offering funds for individuals with poor or bad credit. They do so because even people with no credit score need substantial funds to access decent health care.

The upside of most medical loans is that inability to settle debts may not relate to illness and treatment. Applicants with bad credit can take out loans but must agree on higher interest rates and APRs. The logic behind this is that you’re a riskier client and lenders fear that you may not execute payments on time. To secure themselves against financial loss, lenders impose higher rates.

Whichever lender you decide to go for, do your homework beforehand. Getting a medical loan to ensure health care is an option, but not the only financing alternative. Medical loans for bad credit may strain your budget to the point that you may no longer cover the monthly payments.

Moreover, think about securing your healthcare loan to negotiate better loan terms. You will have to provide collateral, such as your car, but terms and rates will be more affordable.

Alternatives to Medical Loans

As convenient as medical loans can be, there are often better ways to finance a surgery or treatment. Consider paying off your medical debt through the following financing options.

Apply for Financial Assistance

It’s possible to receive financial assistance from the government, a nonprofit, or a healthcare institution. First, consider the Medicaid program to settle some of your medical bills. Then, you can check whether your state offers health insurance plans that cover costs for kids in lower-income families.

Besides, many healthcare providers offer aid to those who cannot afford to pay their medical bills. Several hospitals and nonprofit medical networks approve healthcare funds for people in need. It’s advisable to discuss with your doctor if they offer such financial aid programs.

Furthermore, many national and local charities provide help with healthcare expenses. Some of the most popular national charities include the Patient Access Network and the Health Well Foundation. Many charities offer support for medical bills if you qualify. Other organizations fund specific diseases or approve funds to people in certain professions.

Our final advice is to consider this loan option before anything else. It may be time-consuming, but you will get free money to sort out your financial issues if you qualify. Such money aims to help people with no income, so it’s up to you to take advantage of it.

Ask for a Discount

Many healthcare providers may be willing to approve discounts to uninsured patients. Reduced bills may apply even to individuals who aren’t eligible for free or discounted care. Each hospital has specific policies, so you have nothing to lose by asking for a reduced bill. Never pay straight out of pocket if you’re uninsured or uncovered for the medical procedure you need without negotiating the terms first.

Hospitals don’t want to track down people who receive care and cannot pay later on. So, that may be willing to negotiate with patients ready to cover at least a portion of the bill. Some healthcare institutions may adjust and even cover up to 50% of your medical services.

Use a Medical Credit Card

In the worst case possible, your doctor’s office won’t agree to sponsor your treatment. In such cases, when you need to provide funds for your healthcare, consider a medical credit card. These credit cards work with specific healthcare providers only. So, check whether your preferred hospital accepts them before signing up.

Medical credit cards are handy since holders can use them for various treatments. Some of the plausible uses include allergy therapies, dentists, eye doctors, cosmetic surgeons, and vets. The best thing about medical credit cards is the deferred interest rate. Hence, if you pay off your balance within the defined deadline, you won’t pay any interest. However, if you fail to settle your debt within the set timeframe, you will probably cover the entire accrued interest.

One of the best credit cards for healthcare is CareCredit. The card offers short-term financing at 0% introductory interest. The repayment term may stretch up to 24 months. For more extended periods, the average APR stands at 26.99%, and approval gets based on your credit. Other options include AccessOne and Wells Fargo Health Advantage Card.

Create a Payment Plan

An ideal payment option would be to establish a payment plan with your healthcare provider. If you repay the debt within the set term, you can avoid paying interest altogether. All you need to do is request to pay the bill over time.

You may realize that arranging payment plans directly with providers is a smart medical financing option. Some hospitals will accept as little as $50 a month with or without interest. Hence, discuss your worries about expenses with your doctor and get all payment terms in writing. If any of your circumstances change, discuss them with your provider and negotiate a different plan.

Note that many healthcare providers insist on a deposit followed by 36 monthly payments. Conversely, others accept only installments until you repay the debt in full. Ensure you’re aware of the total financial cost and ask if there are any fees or charges related to the payment plan.

Apply for Personal Loans

Many times healthcare emergencies or prescription drugs might cost over the moon. In such instances, patients find themselves unable to pay out-of-pocket. Even insured individuals may get stuck in a debt pit due to high deductibles beyond their income.

When in financial hardship, troubled borrowers can use a personal loan to cover healthcare expenses. Liable costs may include surgeries, dental work, or medical treatments. Using a personal loan to settle healthcare bills can be a valuable tool to relieve stress on both sides.

Applying for a personal loan is straightforward and doesn’t take long. Once you get approval, expect to see the funds on your bank account within 24 hours at the earliest. With personal loans, repayment terms can be flexible, and you may agree on fixed interest and set monthly payments. Often, personal loans entail more affordable interest rates and APRs, unlike most credit cards.

Besides, our approval criteria are not as strict as those of other financing options. To streamline the process, the required documents are few and easy to procure. Plus, our lenders will be willing to find a fixed-rate personalized option that works for your situation. This way, you know what to expect from your loan as you recover or continue treatment.

Payday Loans

Medical costs may reach thousands of dollars and often come out of nowhere. One of the viable loan options is to apply for a payday loan online with us. Payday loans are small-dollar, short-term funding alternatives. Typically, they don’t require hard credit checks but often undergo soft credit checks. An average payday loan can range from $100 to $1,000 and involves a fast turnaround.

Applicants can request an online cash advance once they learn of the medical expenses. The application process won’t take you more than five minutes, and approval follows quickly afterward. Feel free to submit your documents online from your mobile phone.

Our payday lenders approve borrowers with poor or no credit score who strive to cover medical costs. To do so, lenders simplify both the application and depositing procedure. Applicants with a good credit score usually get funds within a day and repay the loan with their next paycheck. What you must focus your efforts on is finding a secure direct online payday lender.

As for interest rates, payday loans can be a hefty financing alternative. Also, APRs may exceed 400%, depending on your credit score and terms. Last, if you need help paying hospital bills, payday loans same-day deposit can help you on short notice. This way, you can relieve some of the stress triggered by balancing your checkbook.

Bottom Line

Many Americans realize that medical expenses are among the highest they will have to pay in their lives. Elective, preventive, and emergency procedures might seem beyond your financial power. Still, taking good care of your health is mandatory. Proper and timely attention can help prevent a serious illness later on. Plus, you can save thousands of dollars on medical expenses by tackling health issues in the early stages.

Whether you go for payment plans or debt consolidation, loan proceeds can help out. Medical financing exists for a reason. Any such loan purpose is to provide you with the essential care you need. Hence, think twice before you decide to put off medical treatment due to its high cost.