Medical debt in the US is a global problem. The new Kaiser Family Foundation report shows that nearly 41% of Americans have medical debt. More than that, over 12% of them owe $10,000 or more. Thus, about 100 million people in our country live with exorbitant medical debt as they can't cover their medical expenses on their own.
However, the issue is ambiguous and complicated. If we make medical loans disappear, we will see that many people still can’t cover their medical treatment costs without additional financing. Thus, we want to talk about a bright side of the issue. Let's find out what are the best medical finance and loan services available for patients.
What Is Medical Financing?
Medical financing is a form of financial assistance designed to help people pay medical bills. In most cases, medical loans are just regular personal loans. They are unsecured, meaning that you don't need to ensure your payments with any collateral. The amount you can get depends on your income and credit score and can be up to $100,000. You get the whole amount in one lump sum and then repay the funds partially in fixed monthly payments.
How Do Medical Loans Work?
First, you need to choose a trusted lender to borrow money from. Medical loans can be obtained through banks, credit unions, and online lenders. Once you decide on the medical loan provider, you need to go through the application process. This can be made online or in a store, depending on the financial institution. After you complete your application, a lender checks your solvency and credit history to assess your reliability.
If you meet the requirements, a lender will approve you and give you the requested amount. In most cases, you will get a lump-sum deposit into your checking account. Then, you repay the loan within up to 7 years in affordable installments. In addition to loan proceeds, you will also pay interest on the amount you borrow.
Best Medical Loan Options in 2023
Although medical loans are commonly regular personal loans, not all of them are created equally. Repayment terms, loan amounts, eligibility requirements, interest rates, and other loan conditions may vary. To choose a suitable option, you need to know them all. Let's explore the best medical loans for any taste.
Unsecured Personal Loans
An unsecured personal loan is probably one of the most popular options when it comes to healthcare financing. It is on everyone's lips and considered a safe and reliable product to turn to. As unsecured loans don't require collateral, they carry less risk to a borrower but more risk to a lender. Thus, applicants need to meet minimum credit score requirements and be ready to get higher interest rates compared to secured loan options.
An annual percentage rate on an unsecured loan is usually between 5.99% and 35.99%. The repayment terms are 12 to 84 months, and the amount offered can be somewhere up to $100,000.
Bad Credit Medical Loans
If you can't get a personal loan due to bad credit, don't rush to take extreme measures. Multiple lenders offer medical loans to borrowers with less-than-excellent credit. They typically don't run hard credit checks and base their decisions on a borrower's income. This is also the reason why they are so fast. Medical loans for bad credit can arrive in your account within one business day, so they are almost excellent for critical medical procedures. Plus, in most cases, you're allowed to apply online, even if you're already in a hospital.
However, they also have their downsides that come in the form of high costs. Interest rates for some options significantly exceed the national-average APR. Also, the amounts you can access with bad credit are typically smaller.
Home Equity Loans
Home equity loans may be risky, but they are also lifesaving for homeowners with credit issues who need a significant amount to pay for medical treatment. As the name suggests, these loans allow you to borrow against the equity you own in your house. You use it as collateral and can access up to 85% of its value in one lump sum. The repayment terms may be up to 30 years.
Additionally, lenders offer home equity lines of credit that provide you with a revolving credit line. The main difference is that you pay interest only on the amount you actually spend. Typically, you may withdraw money within up to 10 years and make only minimum payments. After this draw period ends, you start repaying your loan within up to 20 years.
Medical Credit Cards
A medical credit card is another popular option for people who are looking for more flexibility. It works like a regular credit card but can be used for medical expenses only. They allow you to cover multiple medical services, including cosmetic surgery, veterinary, dental treatment, LASIK, and more.
Although they are accepted by most healthcare providers, there may be exceptions. Ask your medical provider about the programs it participates in before considering what medical card to choose.
0% APR Credit Cards
0% APR credit cards allow you to use the money within your credit limit for free within a certain period. This timeframe is called a promotional period. Within this term, you can pay for anything, including medical expenses, and the interest won't accrue. You need to make only minimum payments, which are typically a percentage of your balance. If you manage to repay the borrowed amount within the promotional period, there's no interest you will have to pay.
When Should You Get a Medical Loan?
When it comes to personal loans, a lender doesn't limit you in the way you use money. It's your responsibility to assess the situation and make an informed borrowing decision. Medical loans are worth obtaining in the following cases:
- You will use them to cover the cost of a medical procedure that will improve your quality of life;
- You don't have enough money to pay for a life-saving o critical procedure;
- You don't have medical insurance, or your insurance plan doesn't cover the cost of the procedure you need;
- You have a stable income and are 100% sure you will be able to repay the funds.
How to Get Medical Procedure Loans?
A procedure and requirements can vary by lender, but we can describe the whole process in a few general steps. You typically need to:
- Check your credit score. This will help you understand what options you can consider. To do this, request a free annual credit report from each of the three credit bureaus.
- Do a thorough research. Comparing medical loans is essential. This will help you make a weighted decision and ensure you choose a lender with the best possible loan terms.
- Complete an application. Apply online or visit a store. Also, make sure to prepare all the required documents in advance to make the process smoother.
- Get the funds. If approved, a lender will transfer the money to your bank account or provide access to a revolving credit line, depending on the type of loan.
Things to Know About Loans for Medical Bills
The first and the most important thing to know is that loans for medical bills must be repaid over some time. If you fully understand the consequences and take them seriously, it can prevent you from multiple problems down the way. Also, there are a few more things to keep in mind.
- A lender will charge interest rates and fees. Thus, you have to repay more than you initially borrowed. Make sure your interest rate is reasonable. Also, check your loan agreement for additional charges that can potentially affect your loan cost. Some of them include origination fees, late fees, and prepayment penalties;
- A lender will judge your ability to repay the funds. This way, your credit history and monthly income are two major determining factors;
- If you have bad credit, you may be offered a secured loan. You may be asked to provide collateral or bring a co-signer to access the funds. Also, your interest rate may be higher than those offered to borrowers with good credit;
- The amount you need is not necessarily the amount that you will be able to get. A lender will determine how much you can borrow based on your income and credit score.
Alternatives to Medical Loans
If you can't qualify for a medical loan or don't want to go into medical debt, consider the following options you can turn to.
Health Insurance
Health insurance can be expensive, but it gives you peace of mind along with the feeling that you're covered in case of unexpected health issues. This Is also a great way to save money in the long run. Health insurance can provide certain coverage for your medical procedures, with some of them can be covered up to 100%. However, not all types of medical expenses can be financed by your insurance plan. In some cases, you will have to cover your treatment cost or its portion out of pocket.
Payment Plans
If you can't pay your medical bills on your own, ask your medical provider whether it can offer you a payment plan. This option is mostly available through major healthcare organizations. It allows you to split the whole cost of medical treatment and repay it in parts within several months. Payment plans look similar to traditional loans, but most of them charge no interest, which makes them more affordable.
Discounts
Don't be afraid to ask your loan provider for a discount. Even if you can't qualify for other forms of medical financing, some healthcare organizations have specific discount policies and can offer you more affordable prices for their services. At least you don't lose everything, so it's worth trying!
Federal Government Grants and Programs
Some categories of US residents can count on government assistance when it comes to medical treatment. Many agencies and organizations help eligible individuals and households, single parents, pregnant women, and pensioners get the needed medical services for free or at a reasonable cost.
Most options are designed for low-income people, so you need to meet certain income requirements to qualify. If you're above the federal poverty guidelines, consider such programs as Medicaid and CHIP.
Financial Assistance Programs from Hospitals
If you get medical treatment in a nonprofit hospital but can't cover its cost, turn to its billing department and ask about available financial assistance programs. Many hospitals are willing to help low-income patients who meet their income limits. If you qualify, you may either negotiate lower medical bills or even get medical assistance for free.
Crowdfunding
Crowdfunding is a popular option that allows you to get free money from other individuals. But first, you need to explain what your point is and what you need the money for. To get started, you simply need to create a company on a crowdfunding platform and share it with other people. Then, those who want to help you will make donations.
The Bottom Line
Health issues can catch us by surprise and result in exorbitant medical bills. Even if your financial situation does not involve going to the doctor, this is not a reason for ignoring your body's alarming signals and neglecting your health. Instead of postponing an appointment, consider available options for medical financing. Some of those offered in the article can help you out, even if you have poor credit.