Basics of a Medical Loan: Things to Know

There is no denying the fact that medical debt is currently one of the major problems because of the increasing costs of different kinds of treatment as well as restrictions on the insurance coverage. Most people have no other choice other than borrowing money in order to pay money in case of any medical emergency, especially when the hospital is going to conduct certain important medical process. According to, 1 in 5 Americans, who are working, have problems associated with clearing the medical bills. If you are interested in understanding the most affordable options, so that you can save a lot of money and also avoid getting into medical debt, you should opt for medical loans.

Medical loan

A medical loan is basically a personal loan, which is normally taken out for financing certain important medical procedures, reconciliation of medical debt, optional procedures of surgeries, certain charges which are out of network, or other costs that are not in any way covered by the health insurance that you have.

Benefits associated with medical loans

In the United States, a medical bill is the most important reason as to why people tend to file for bankruptcy. Taking medical loans will permit you to take care of your health. It is also one of the major steps that you can take for clearing the bills and also avoid the anxiety and stress associated with the collection calls, which you are going to receive if you are unable to clear the bills within the stipulated time period.

Given below is a list of the benefits, which are associated with the medical loans.

  • You can get funds, which are necessary for the medical procedures, faster in comparison to waiting to understand if your medical insurance is going to cover them or not.
  • An unsecured medical loan does not require any collateral.
  • A medical loan is not going to impact the utilization of credit ratio on the credit report.
  • A medical loan in certain circumstances is going to offer ideal options for financing as well as rates in comparison to when you decide to finance through a medical service provider.
  • You can also use money from the medical loan for covering the other expenses, which include, the living expenses that are required during the entire recovery as well as treatment.

Situations where a medical loan can be helpful

Medical loans are used for covering a number of medical costs, which cannot be completely covered by medical insurance. Given below is a list of the common procedures as well as situations, during which a medical loan can be extremely helpful.

  • Cosmetic surgery.
  • Fertility treatments.
  • Any kind of surgery related to weight loss, for instance, the bariatric procedures.

Some people also tend to opt for medical loans when they do not have a surety if the insurance plan that they have is going to completely cover an expensive procedure. For example, few health insurances cannot cover the procedures of plastic surgery. In this situation, medical loans are definitely going to be a great option. At certain other times, there is a chance that you want to go through certain medical procedures, which are not considered to be medically important by the health insurance that you have. In this situation, you might have to take a medical loan for covering the partial or complete costs of the procedure or certain tests.

How does a medical loan work?

Medical loans are known to be offered by a number of lenders. Also, the process of application is almost similar to other kinds of credits. However, it is also dependent on the lenders, whether they are willing to be more flexible when the credit score is required. One disadvantage of a medical loan is that they are known to have high rates of interest. Therefore, before you choose medical loans, it is crucial that you conduct research on the different payment plans as well as the credit cards.

Tips for comparing medical loans

Given below is a list that you should definitely follow for comparing your medical loans.

The annual percentage rate

The rate of interest in the savings account is capable of helping you to save a lot of money. Similarly, the rate of interest on a particular loan is going to make a great difference in the total money that you have to pay at the end of every month. It is also going to impact the ability to clear the loan. Low-interest rates can be around 5% to 6%. However, numerous medical loans also have high rates of interest. When your interest rate is extremely high, you are going to take time clearing your medical debt, especially if you decide to make small payments and the term of your loan is really long.

Cost of origination and periods that is interest-free

Few medical loans are also responsible for offering a grace period where you do not have to pay a rate of interest. Some are going to provide the grace period of 18 months before you start clearing the interest.

Origination cost is the one time charge, which the lender is going to charge when he is processing your loan. This charge can be $100 or more, depending on the value of your medical loan. It is basically going to be the percentage of your medical loan’s value. The cost of origination is normally taken from the loan but the lender includes it in the APR calculations.

Fixed or variable rate of interest

A variable rate of interest is when the rate of interest changes over the medical loan’s term. This is known to impact the payment schedule and the time that you are going to take for clearing your loan.

Fixed rates of interest will help you to know the exact amount that you will have to pay because the interest rate is locked. This helps in managing the budget because you already have an idea about your loan payments. They are not going to vary.


Medical loans are extremely important especially when you are unable to cope up with the medical bills of your hospital. It is always a good idea to choose the medical loans so that you can be treated properly and you do not have to worry about their expenses.


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