What is a medical loan? Medical expenses explained
A medical loan is a type of personal loan that is used to help pay for (or towards) medical expenses, a medical procedure or medically-related costs, which are not covered by your insurance.
How does a medical loan work?
Medical loans can help when your insurance is not able to. They can help pay for an emergency procedure or contribute to a portion of the expense that insurance doesn’t cover.
They can also help consolidate current medical debt. A medical loan is generally an unsecured loan which means you don’t have to have collateral to finance against. Additionally, these types of loans could help cover costs that insurance deems not medically necessary, such as plastic surgery or bariatric surgery.
To be considered – loans for medical expenses
- If your credit history is less than perfect this could result in paying higher rates of interest
- If you have a lower monthly repayment over a longer period of time, you could end up paying a high amount of interest.
- A medical credit card may be a more viable and cheaper option, or the hospital may offer financial help
Benefits – loans for medical expenses
- Can help manage health care costs and avoid any more worry
- If you have had a medical emergency, you could get the cash quickly if you qualify for the loan
- You can repay over a fixed term with fixed repayments to suit your budget
The finance could help with medical-related expenses, such as living expenses if out of work for a while during recovery.
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Getting A Loan For Medical Expenses
Millions of Americans are landed with large bills for medical procedures every year, with many wondering how they’ll manage to pay. Whether it is a medical emergency or surgery that you have elected to have, such as plastic surgery, IVF, or bariatric surgery, acquiring a loan for medical expenses is just one of a few options available to you.
In fact, medical debt can be very easily accrued. Your insurance, if you have it, may not cover all procedures. You may discover that you have large deductibles or copays. You may not have insurance or savings at all, in which case you’ll likely need help from an alternative source, and some wish to consolidate previous medical debts.
To emphasize the potential outlay of medical costs, a survey in 2017 by the University of Texas Southwestern showed that the average cost of a heart attack is $53,000. With figures like these, it’s not surprising that medical bills are in the US’s top three causes of bankruptcy. In light of this, it is estimated that half of you will have had medical treatment postponed or declined due to financial issues.
With that in mind, here are some of the best options available to you.
The majority of lenders don’t distinguish between a personal loan and a medical loan. They will accept that the loan could be used to pay for medical expenses.
A personal loan for your medical expenses can be one of the easiest and quickest ways to get the help you need. A fixed-rate loan can help you calculate your finances better by paying off the borrowed sum with fixed monthly installments over a few months, or even years, whichever suits your budget.
The APR on a variable rate loan will vary according to current market interest rates. You could pay less for some months, but be aware, there is also a very good chance you could end up paying more too!
Here at The PaydayKing, we can help you get one of the best personal loans for medical expenses. You could borrow a loan amount from as little as $100, up to $2,500. Notably, this is helpful to those that struggle to find a loan amount low enough for what they need!
Click here to see if you are eligible, with a decision in minutes.
A secured loan, also known as a collateral loan, allows you to use something of value to set against the loan amount. This may be helpful for someone with a less-than-perfect credit score.
For example, this security could be your house, a car, or savings, etc. This permits a lender to possess whatever you use as collateral should you default on your loan repayments, meaning they will get their money back that they loaned you. Moreover, a secured loan could also decrease the APR, meaning you’ll repay less overall.
Another key point is that with any loan, your credit history will be taken into account. If you have a good or excellent credit score, you will be offered lower APRs than if you have a low credit score. This is because the higher your credit score, lenders see you as less risky because your credit report proves you can manage finances well.
It’s important to realize this doesn’t mean that you won’t be able to get a loan if you have bad credit and a low credit score, but merely that you may receive fewer offers but with higher APRs based on your credit profile.
Generally speaking, when looking for loans, there are a number of comparisons to make before accepting any offers:
- Compare APRs and the total amount to be repaid
- Whether APR is fixed or variable – fixed allows you to budget better and gives you peace of mind. Variable rates may fall, allowing you smaller repayments while lower, but they could also rise too!
- Loan term – monthly repayment figures are affected by how long you wish to take the loan over. A longer-term loan will give you lower monthly repayments, but a shorter-term loan means you’ll pay less interest in total. Aim for whatever comfortably suits your monthly budget when making your loan application.
- Origination fees – some lenders charge from 1% to 10% of the loan value to cover processing the loan. This fee is deducted from the loan amount so if you need $2,000, you would need to add the origination fee to that amount. This fee doesn’t mean you should automatically turn down the loan offered because it may have a lower APR than others you have been accepted so you pay less in total.
Credit Card Options
If you have an existing credit card with a freed-up balance, this is one way to immediately pay an existing bill.
Alternatively, there are other credit card options available.
Consider securing a 0% introductory credit card if possible. If you have a low credit score, this option may not be readily available to you, if at all. This method of repaying your medical billing only works well if you pay off the full balance before the promotional offer ends, otherwise, you could end up repaying the remainder with an exorbitant APR.
Medical credit cards are available that cater specifically to medical costs and can be provided by both medical providers and lenders. However, the APR that medical credit cards charge can vary wildly and will require some research before opting for the right one. For example, some may offer zero-interest or a very low APR, yet others can have sky-high APRs, so ensure you are fully aware of this before applying and utilizing the credit. As advised above, attempt to pay off the full balance before the end of the introductory offer, if you have received one.
In-house Finance/Payment Plan
Of course, your medical office also may be able to set up financing options for any treatment you will receive. Many do so with low or zero interest too. Consequently, this may make it a more affordable option than high-interest credit lines.
All things considered, personal/medical loans could work out cheaper overall than a credit card that doesn’t have a zero-interest rate. However, if you don’t have a good credit score, you may not be able to gain the perks such as a low-interest rate. In that scenario, your medical office may be a better option.
A loan may allow you to organize your budget better, by choosing a longer or shorter loan term that suits your monthly outgoings.
Any of these options could save you from having to use emergency savings, so long as the repayments are comfortably affordable and don’t get you into further debt.
Check your credit score before looking into any credit options – this will give you a better idea of what may, or may not, be available to you. For example, online lenders, such as we have on our panel, specialize in loans for bad credit. Coupled with that, click here to see how to improve your credit score if it is less than optimal.
Some medical bills are significant so ensure you spend some time researching which is the best option for you before plunging into more debt unnecessarily.
Trust in The PaydayKing to do our best to help you out of a tight spot!