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Medical expenses can put a significant strain on your finances. According to the Bureau of Labor Statistics, Americans spent over $100 billion in 2016 on medical expenses alone. And according to the Kaiser Foundation, almost 30% of people report that they have trouble paying medical bills. A medical loan can help you cover bills from doctors and hospitals or any medical-related expense.
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SoFi personal loans
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We analyzed medical loan lenders that accept people with fair credit and a higher debt-to-income ratio. We then weighted five key metrics: maximum loan amount, interest rate, fees, perks and reviews to find the best options to pay for a medical expense or consolidate medical debt.
Medical loans are meant to cover the expenses your insurance doesn’t — either because your copay is too large or the service isn’t included in your package. The most common uses of a medical loan are usually procedures that aren’t considered crucial by insurance providers. They include:
Use our calculator below to find out how much a medical loan may cost you.
|Loan terms (in years)|
orCompare medical loans
Patient financing is a loan that you get through your medical provider, usually through a third party. Some big providers may have their own in-house financing programs, but not always.
Here are some of the different patient financing programs available:
Unlike insurance, healthcare financing is available for nearly all medical treatments. You can use it to cover everything from bariatric surgery to buying a hearing aid when your insurance coverage falls short. Even to pay for what insurance companies consider elective procedures, like cosmetic surgery or LASIK eye surgery.
You can also finance other costs your policy leaves behind, like that $2,000 ambulance ride or prescriptions for expensive medications.
Your specific patient financing options will likely come down to what your doctor’s office offers. Here’s how in-house patient financing and general-use personal loans differ.
When you need funds to pay for a specific procedure or hospital stay, healthcare providers often offer financing with partner lenders. It’s a tempting option because there isn’t much you have to do — if you’re approved, the money goes directly to the hospital or doctor’s office.
But your choices are limited to what your medical provider offers. And it can also be more expensive than a general-use personal loan, especially if you don’t have good or excellent credit.
Generally, you can use a personal loan for any legitimate expense, including medical treatment. You can typically borrow from $2,000 to $50,000 and pay it back over a fixed term, usually between one and five years.
After you’re approved and receive your funds, you have the freedom to spend it on paying off hospital bills, picking up prescriptions or covering unexpected ambulance rides. You can also use a personal loan to consolidate your medical costs into one bill so that it’s easier on the wallet and mind.
These won’t cover the medical bills that have already come due, but they can help make a dent in future expenses. Many are free of charge, available to people without insurance or both.
Here are a few ways you can manage your money and keep up with bills while receiving medical treatment:
When you’re facing a large bill from past surgeries or multiple upcoming doctor visits, good interest rates and loan terms may be the last thing on your mind. But understanding your loan could help you save.
Start by checking out the loan options available from your local bank or credit union. These usually have the lowest interest rates and accept people with a variety of credit scores. After you’ve exhausted this avenue, compare your rates for online lenders. You can usually apply completely online without having to fax any documents.
Once you’ve found a few loan options that suit you, compare these five main factors:
Medical loans work like other personal loans. Lenders will request that you supply both information about yourself and your income in order to determine if you meet eligibility criteria.
If you plan on using your loan to consolidate your debt, you may need to provide information about these accounts so the lender can send funds to pay off your accounts for you.
Medical loans are good solutions for many situations, but that doesn’t mean they’re always the right choice. When browsing your financing options, keep in mind that medical loans are meant to be used to pay for upcoming or past medical procedures and surgeries.
If you find yourself with quite a bit of medical debt already accrued, a medical loan won’t be your best choice. Rather, you may want to seek out debt consolidation services to combine multiple monthly payments into one.
If you have more than just a medical expense you need to pay for, then a personal loan or line of credit might suit your needs better. Many of these also allow for cosigners, which could potentially help you qualify for more money or a lower rate than you would if you applied as an individual.
No matter your decision, proceed with caution. Every loan, whether it’s medical or not, comes with fees and interest. Be sure to create a solid budget for payments when determining how to handle your medical debt.
Not everyone has the extra income to spend on making loan payments, and people without good credit will likely find the interest they’re being charged too much to handle. Instead, use these three methods to handle your medical expenses without a loan.
You’ll likely run into these terms quite a bit as you navigate medical debt.
Coinsurance is the amount you’re required to provide for a medical service or prescription. It’s calculated as a percentage of the final amount. Some insurance companies may require you to meet your deductible before coinsurance takes effect.
Copay is a set number you’re required to pay for a medical service or prescription. Like coinsurance, it can take effect either before or after you’ve met your deductible.
When you fail to repay a medical bill, it can be sent to collections. Many hospitals and private providers have their own collections process before it’s sold to an official company. Once this happens, your bill will be noted on your credit report and may reduce your score.
A deductible is the amount you must meet in order for your copay or coinsurance to start. Many insurance companies offer high deductible plans and low deductible plans, and certain services like yearly wellness checkups are covered before you meet your deductible.
This is a document sent by your insurance company that explains what services were and were not paid for. It is not a bill. Your bill will be sent by your provider and may be different from your EOB.
FSAs are offered by some employers. The money you contribute isn’t taxed, and you choose how much you’ll be contributing during the year. However, if you don’t use everything in the account, it may not roll over. This makes estimating for emergencies. difficult.
An HSA is attached to you, not a job, but you must have a high-deductible plan in order to qualify. You won’t pay taxes on the money you draw for medical expenses.
This is the maximum amount you’ll be required to spend by your insurance company and often includes your deductible. For instance, if your out-of-pocket maximum is $7,000 and your procedure costs $8,000, you would only be required to pay that $7,000.
Medical loans can be a life-saver, but they don’t come cheap. By comparing your options and using multiple sources of funding, you can lower your expenses and pay for whatever procedure you need done. Since many medical loans are personal loans, you should read our guide to personal loans and find the terms that work for you and your financial situation.
Read more about medical loans with these answers to common questions.
What will the interest rate be on my medical loan?
Interest rates vary depending on the lender and your credit profile. You can explore the starting rates of the lenders in our comparison table above. After applying for the loan, you’ll receive a more accurate estimate of the interest rate the lender will charge. which usually ranges from 6% to 36%.
Will a medical loan cover my specific procedure?
Most likely, yes. Lenders don’t usually exclude certain procedures as long as the procedure was performed by a reputable medical professional. You can check the lender’s website before applying or call their customer service line to be sure.
Can I use a medical loan to pay for a medical bill that’s in collections?
Medical loans are usually meant to pay the facility or medical profession that’s owed. If your bill has been sent to collections, a debt consolidation loan may be more appropriate. However, if you’re applying for a personal loan to use for medical expenses, its specific purpose likely won’t matter.
Can I apply with a cosigner?
It depends on your lender, but many lenders allow you to have a cosigner if you believe it will increase your chances of qualifying for the loan.
Can a medical bill go into default?
Yes. If you don’t pay your medical bill in full or don’t set up a payment plan with your physician, your bill may go into default and sent to collections.
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