Medical loans

Medical costs can be intimidating, particularly where part of or full costs of procedures are not covered by private insurance policies. However, rest assured there are many options that can help you to cover the costs without the need to drain your bank account and/or savings. Medical loans and medical finance are there to help people get the treatment they need safely and affordably. These include personal loans, in-clinic payment plans, and even interest-free finance.

A medical loan can also be used to cover the cost of specialist appointments, hospital expenses, medical equipment and even travel expenses and recovery time. Compare your options below.

How does medical finance work?

Medical finance works in the same way as any other form ofpersonal finance. Borrowers apply for a loan and, if approved, use the allocated funds to pay for medical expenses, as well as living costs that you might incur while taking time off of work. Like any other form of personal loan, you get the money upfront and pay it back over time, along with any subsequent interest payments and fees.

Does the money come to me and I get to pay for things? Or does it go straight to my doctor?

If you opt for a payment plan from your clinic, the money will go straight to your doctor. However, if you opt for a personal loan to cover your medical costs, the money will usually be transferred directly to your bank account, whereby you can use it to pay for the medical bills yourself.

What types of loans can you use?

You can consider a few different types of financing if you require medical treatment:

• Unsecured personal loan. You can use an unsecured personal loan for any purpose, including medical expenses. Lenders will typically let you borrow between $1,000 and $50,000, depending on what you can afford to repay. Interest rates vary between 9.95-29.95% p.a.
• Specialised medical loan. Providers such as Westpac and Nova Medical Finance provide funds for medical procedures including cosmetic surgery and dental work.
• Short-term loan. If you only require a small amount and are not eligible for a standard personal loan, you can consider a short-term loan. You can apply for a loan from $100 and repay within a few months. Bear in mind that interest rates and fees will be much higher with a short-term loan.
• Credit card. If you have a credit card or are eligible to apply for one, this is another finance option to consider. A credit card may be suitable if you don’t know how much money you need to borrow, or you want to take advantage of interest-free periods and reward offers. Credit cards work differently than other loans, as you only need to make a minimum repayment each month and can redraw the credit up to your limit. Make sure you have the means to repay the money you use and that you won’t fall into further debt.

What can a medical loan cover?

You can use a medical loan to cover any of the expenses associated with your medical treatment, such as:

• Medical or cosmetic surgeries.This includes any optional or elective surgeries, as well as any procedures performed at a private clinic or hospital.
• Specialist or doctor appointments.If you need to regularly visit a specialist, you can get a medical loan to cover the cost of these appointments, regardless of whether they are covered by Medicare or your insurance.
• Medical treatments or medicine.You can also use a medical loan to purchase specific drugs, treatments or medicines.
• Hospital expenses.It can be expensive to stay in hospital, but you can use a medical loan to cover any of the costs that you incur as part of your stay. This could also include any specialised procedures you receive while in hospital, such as X-rays or MRIs.
• Personal medical equipment.If you require certain medical devices or equipment to help your recovery or to treat an ongoing medical issue, you can use a loan to cover the purchase costs.
• Travel expenses.If you need to travel to get medical treatment, the cost of travel and accommodation can also be covered by a loan.

You can use most personal loans for any worthwhile purpose, and this includes any medical treatments or their related costs. If you’re unsure whether a particular cost can be covered by a medical loan, it may be worth contacting the lender directly.

Why you might need a medical loan

Some procedures are not covered, or are only partially covered, by Medicare and/or insurance policies. While health policies vary greatly, some procedures that are excluded from cover, or have restricted cover typically include:

• Plastic and reconstructive surgery (e.g. skin grafts following burns, skin flap repair and breast reconstructions following cancer)
• Cardiac and cardiac related services (heart investigations and surgery)
• Cataract and eye lens procedures (eye surgery)
• Pregnancy and birth related services
• Assisted reproductive services (infertility services)
• Hip and knee replacements (joint surgery)
• Rehabilitation and psychiatric services

How should I compare medical loans?

Medical loans offer many of the same features as other personal loans, but some of the features are more specific:

• Fees. Most loans come with costs, and medical loans are no different. Depending on the lender, you may have to pay a loan establishment fee and monthly account maintenance fees. Early repayment fees should also be taken into consideration.
• Interest rate.Check if the interest rate is competitive compared to other personal loans.
• Repayments. Lenders may differ in how flexible they are with repayments. Most offer you the option of making your repayments weekly, fortnightly or monthly, but some may allow you to make additional repayments to help save you money in the long term.
• Loan amount. As medical costs can be quite steep, medical loans are usually for higher amounts than other loans. Some medical loans have quite high minimums, so make sure you don’t borrow more than you need.
• Loan terms As the loan amounts are typically higher with medical loans, the provider may offer you a more extended period to pay it back. Check to see if you can manage the repayments with the loan term the lender sets.
• Restrictions.How flexible is the loan purpose? If you would like some additional funds for recovery time surrounding your medical procedure, you might want to ensure that the entirety of the loan is not required to be spent on the medical bills themselves. Most personal loans will be flexible when it comes to how the funds are used, but it’s still wise to check, just in case.

How much can I borrow with a medical loan?

With a medical loan, you can generally borrow up to 100% of your medical expenses, or sometimes more, depending on a number of factors. These factors might include:

1. The lender.If you opt for a payment plan with your clinic, you can usually cover 100% of the medical costs. However, this might not be preferable to you if you would prefer to pay for part of the procedure yourself with savings, or if you require more finance for recovery time (i.e. if you are unable to work for a period after your procedure). In these cases, a personal loan might be better than in-house financing.
2. Your financial situation.How much you are eligible to borrow will depend on your financial situation. For example, if you have a poor credit rating, you may be eligible for less finance than someone with good credit.
3. Your income and outgoings.You will only ever be able to qualify for finance that you will be able to comfortably repay. Lenders often determine this by looking at your income, as well as the any outstanding debts that you already have.
4. Loan security.Generally speaking, you can usually qualify for a higher level of finance if your loan is secured. Loans can be secured with the equity in your home, your car, or other valuable property that you own. If you’re securing your loan, you can usually qualify for finance up to the value of the property collateral.

How can I get a medical loan with bad credit?

Having a poor credit history can negatively impact your chances of getting a loan, but it certainly doesn’t make it impossible. If you have bad credit and you need to pay for medical bills that you otherwise cannot afford, there are a number of medical loans for bad credit that might be able to help:

• Short term loan.If you have a bad credit history, you can usually still qualify for ashort term loan. These loans are generally available up to $2,000, though you can find lenders that offer $5,000 or even $10,000 short term loans. Please be aware, however, that these loans have high fees and interest rates attached.
• Bad credit loan.Bad credit loansare also a viable option if you have previous defaults on your credit history. However, like short term loans, you may find that you only qualify for a lower amount or a shorter term, or that you are charged more than borrowers with good credit scores would be.
• Secured loan.If you have bad credit but you offer an asset such as real estate, a vehicle or even valuable art/jewellery as security for a personal loan, you could potentially lower your rate and increase your chances of being approved.
• Get a guarantor.If you have a friend or family member who is willing to be a guarantor for you, aguarantor personal loancould be an option. If you default on your loan repayments, a guarantor becomes responsible for the loan, meaning that less risk is posed to the lender.

Can I get a medical loan if I’m self-employed?

It is still entirely possible to get a medical loan if you’re self-employed. However, providers may look at your finances more closely than if you were employed by a company. This may mean that your application takes slightly longer than average.

Some of the additional documentation that you may be required to provide if you are self-employed can include:

• Company-specific information.If you own your own business, be prepared to provide information such as your company’s NZBN, address, etc.
• Tax returns.Be prepared to show the last two years of your full personal and/or company tax returns. These will help prove any income you declare on your application.
• Financial statements. These may include any profit/loss statements to also support the income that you declare.
• Proof of rental income. If you have any income from rental properties, you can declare this with real estate statements or copies of your executed lease agreements.
• Recent bank statements.This includes statements showing your savings and business transactions. It may also include statements showing any other outstanding loans or credit cards you have with other lenders.

Should I take the finance offered by my clinic?

Whether or not you opt for in-house financing from your clinic will depend on the type of finance that your clinic offers. Many clinics will offer an interest-free period on their treatment loans, usually somewhere between 6 and 12 months. After this initial period, however, high interest is usually charged.

If you want longer to repay, or if you want the confidence that your medical repayments will not dramatically increase after the introductory period, a personal loan might be a better option for paying for your treatment.

How long does it take to get approved for a medical loan?

The amount of time it takes to be approved for a medical loan will depend on the lender and the type of loan you go for. Some loans might take a few days to qualify for, while some may take a few weeks. That being said, many lenders do offer next-day, or evensame-day approval on medical/personal loans.

How do I apply for a medical loan?

If you’d like to apply for a personal loan to finance your medical expenses, you cancompare your options using the comparison table above. If you find a suitable loan, you can then click the “Go to site” button to be taken to the lender’s website to start your loan application. To apply, you’ll need to meet the following criteria:

• Aged 18 or over
• Be an New Zealand citizen or permanent resident
• Be employed or receiving regular payments into your bank account