Medical Loans for Financing Medical Expenses

If you’re looking to consolidate medical debt or planning a pricey procedure, the right medical loan could help you handle these expenses and save on interest charges. Many people struggle to come up with the cash for health care when insurance doesn’t foot the entire bill. Here’s what you need to know to help you find the best medical loan.

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Medical loans are often unsecured personal loans that can be used for medical expenses. An unsecured loan means you won’t need to put up collateral, such as a car, home or savings account, for approval.

Your loan funds can be applied toward just about any medical cost, from bills to living expenses while you recover from an illness or accident.

You can also use a medical loan to consolidate medical bills. If you qualify for a loan with a low interest rate, you could simplify your monthly budget and save on interest.

Here are some examples of what medical loans can cover:

Loan qualification is usually based on the borrower’s credit history and income, but each lender sets its own criteria. Before applying for a medical loan, check whether you meet the lender’s minimum requirements, including:

If you’ve determined that a medical loan is right for you, here are best practices to consider when applying:

You’ll want to weigh the pros and cons of a medical loan before using one to pay for medical expenses. In many cases, “It may make sense to take out a medical loan when faced with necessary medical expenses where you cannot pay for it yourself and your insurance doesn’t entirely cover the procedure,” Tayne says.

But you should also consider whether:

A medical loan might not be your best option if:

If a medical loan isn’t the right choice for you, keep in mind that it’s not your only choice. Fortunately, there are alternatives, such as:

Review your medical bills for errors. Checking every bill or explanation of benefits is a good habit to form. “With complicated codes and miscellaneous fees and charges, it’s entirely possible that you were overcharged or incorrectly billed for medical services rendered,” Tayne says.

If you’re having trouble deciphering your medical bills, call your provider. You might also consider using a third-party service, such as CoPatient, to review medical bills for you.

Negotiate your medical bill. Once you’re sure the bill doesn’t contain errors, ask your doctor’s office about assistance programs. “Hospital billing departments and doctor’s offices will often lower the total amount due if you can show proof of financial hardship,” Tayne says.

Some will even forgive the entire amount if your income is below a certain threshold, she says.

Just keep in mind that not all medical providers can negotiate, and those that do may have limited flexibility, Nussbaum says. “Medical expenses are also expensive in general, and so there might be a floor in terms of negotiating limits,” she says.

Ask about a payment plan. The doctor’s office may be able to create a payment plan, which could help you pay your bill over a manageable term. This could be as simple as dividing the amount due by 12 or 18 months, for example.

“Providers often will finance without interest,” Tayne says, “and that’s a great alternative to a loan with interest. And it doesn’t hit your credit.”

Open a medical credit card. Some health care providers work with third-party services that offer a medical credit card, which differs from a regular card because you can only use it for eligible health care expenses with certain providers. The interest on medical credit cards is usually deferred for a period of time.

That means you can charge qualified medical expenses, make minimum monthly payments to keep the account in good standing and pay no interest during the promotional period. But if you don’t pay off the balance before interest kicks in, you will be hit with interest charges that have accrued from the purchase date.

Use a credit card with a low introductory APR. Some traditional credit cards come with a low promotional interest rate for a certain time frame, often 12 to 21 months. These cards might also come with programs for cash back rewards or airline miles.

But as with medical credit cards, if you don’t clear the balance within the promotional period, then you could end up paying a high interest rate.

Either a medical credit card or traditional credit card can be a good option, Tayne and Nussbaum agree, as long as you qualify for a 0% introductory rate and pay off the card before interest applies.

Explore assistance programs in your state. If you need more help paying for or getting medical care, check for state and local government programs and nonprofits that offer aid. Try these resources: