Installment Loan SOS connects users with personal loan lenders that can help them get out of a short-term financial bind. They offer loans up to $50k.
What is a medical loan?
A medical loan is a personal loan taken out for the specific purpose of financing medical treatment. Medical loans can pay for a variety of medical costs, like elective surgeries, IVF treatments and emergency procedures.
Most medical loans are unsecured, so you don’t have to put your home — or another asset — as collateral in the name of your health. However, to get the lowest rates, you’ll need good credit.
If your credit score needs work – especially if you’ve struggled to pay medical bills in the past – you can also apply for a secured medical loan. The trade-off is that you’ll need to offer some form of collateral, which you’ll lose if you cannot pay the loan. But you’ll get a much lower interest rate and will have less to pay off in the future.
How do medical loans work?
You can get a medical loan by applying online or at a brick-and-mortar financial institution. Many lenders will let you get prequalified, a process that shows you realistic offers without hurting your credit. In order to officially apply for the loan, a credit check, salary verification and other information will be required.
The timeline for receiving the funds after approval will vary from lender to lender but can take as long as a week in some instances. Once you receive funds, you’ll make fixed monthly payments until the loan is paid back in full, with interest added to each payment.
Where to get a medical loan
Medical loans are offered through banks, online lenders, some credit unions and health care providers. When comparing medical financing options, don’t just look at the APRs. Eligibility requirements, loan terms and fees will also impact on how much you’ll pay.
Loans to cover medical expenses are available from online lenders, banks and some credit unions. Healthcare providers may also offer medical loans.
Pros and cons of medical loans
Medical loans can be a good alternative to depleting emergency savings or raising credit card debt. However, they aren’t the right choice for everyone.
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Pros
Predictable payments. Personal loans have fixed interest rates and repayment terms, so your bill won't fluctuate.
Fast funding. Most personal loans are disbursed in a matter of days, getting you the money you need without delay.
Less expensive than credit cards. Credit cards have an average interest rate of over 20%. Personal loans can offer interest rates under 10%.
Flexible. The proceeds from personal loans can be used for any treatment or procedure.
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Cons
Interest. Some credit cards offer a 0% introductory period, but with a loan, you'll always pay interest.
Costly for bad credit borrowers. If you have imperfect credit, you could end up with an APR as high as 36%, plus fees.
Limited amounts. Personal loans typically range from $1,000 to $50,000. If your procedure falls above or under that threshold, you may need alternative funding.
Who medical loans are best for
Medical loans may be a good idea for those who have a solid credit score (700 and above) that can qualify for the most favorable interest rates and terms. A loan may also be a good option for someone who wants to use the funds for a variety of expenses, including travel or other costs incurred in association with treatment and recovery.
In addition, those who need treatment immediately and do not have adequate insurance or enough cash to pay for the medical expenses themselves may want to consider a loan. “When facing a possible life-threatening condition, certainly it is better to take out the loan rather than to make another appointment for some other time,” says Michael Sullivan, director of education at Take Charge America.
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