How to Take Out Medical Loans

Medical care can be expensive in the United States. Although insurance will cover many procedures, deductibles are often high, and it may not cover the entire cost.

In 2017, U.S. households spent $980 billion on health care — an average of more than $3,200 per person, according to the Centers for Medicare and Medicaid Services.

If you have medical costs you can’t afford to pay, medical loans could provide the funds you need. Find out how to take out a medical loan below.

In this guide:

• How medical loans work
• Medical loan options
• Summary of medical loans for health care expenses
• How to compare medical loans
• Alternatives to medical loans
• Looking for procedure-specific medical loans?

How medical loans work

In most cases, a medical loan is simply an unsecured personal loan used to pay for medical care. Medical loans typically have a few key features that make them an ideal choice for financing medical care:

• Fixed loan amounts: With a medical loan, you borrow a fixed amount of money upfront and don’t get access to more cash as you pay down the loan, which can help you control your overall costs of borrowing.
• Fixed repayment terms: Medical loans have a set repayment schedule so you’ll know how long it will take to get out of debt.
• Lower interest rates than credit cards: While the average credit card interest rate is 16.97% as of August 2019, you can usually find a medical loan with a lower rate, especially if you have great credit. 
• Fast funding: In most cases, medical loan lenders release funds quickly after approval.

Medical loan options

Although you don’t have to take out a specific “medical loan,” there are plenty of companies offering personal loans that can be used for medical expenses.

Here are some companies that offer medical loans.

• American Medical Loan
• OneMain Financial
• LightStream Medical Loan

American Medical Loan

• Borrow up to $40,000
• Apply online and get a quick decision and fast access to financing
• Qualify even with bad credit
• Loans can be used to cover all types of medical expenses

OneMain Financial

• Borrow between $1,500 and $30,000
• Apply online and get a quick decision and fast access to loan funds — in some cases, by the same business day if you’re approved by noon
• Fixed interest rates and no prepayment penalties
• APRs from 16.05% to 35.99%
• Choose from a repayment term of 24-, 36-, 48-, or 60-month

LightStream Medical Loan

• APRs as low as 5.74% with autopay
• Borrow between $5,000 and $100,000
• Fixed interest rate and no origination fees or prepayment penalties
• Loan terms from 24 to 84 months
• Excellent credit required

Summary of medical loans to cover health care expenses

How to compare medical loans

When you’re shopping for medical loans, it’s a good idea to get quotes from multiple lenders to ensure you find the best personal loan for your needs. Below are some of the key factors you’ll want to compare.

• APR: You’ll want to look for the lowest possible APR when taking out a medical loan because it can help lower your monthly payments and total costs of borrowing.
• Origination fees: Origination fees are upfront fees you pay to get a loan. Sometimes, the amount of the origination fee is added to your loan balance; it can also be deducted from your loan proceeds. Not all lenders charge these fees.
• Application requirements: You’ll want to pay attention to what each lender requires for a successful application. Some lenders, for example, restrict their loans only to people with excellent credit scores, while others will look beyond imperfect credit when evaluating an application. Many lenders also allow you to have a cosigner if you can’t qualify for a loan on your own.
• Loan terms: Pay attention to the loan amount, type of interest rate, repayment period, and additional fees. You should always look at the big picture to make sure you’re getting monthly payments you can afford with a loan that provides the funds you need.

Alternatives to medical loans

Although medical loans can be a good way to pay for medical expenses, they aren’t the only option. Below are some other sources of financing.

Credit cards

If you already have a credit card, using it to pay for medical care could be much faster and easier than getting approved for a personal loan or medical loan.

However, chances are good the interest you’ll pay will be higher — unless you can qualify for a 0% APR credit card that lets you finance purchases interest-free so long as they’re paid off within a certain period of time, such as 12 months. Such credit cards typically require good credit.

Medical credit cards

Some credit cards are intended specifically for medical financing. For example, CareCredit is a health care credit card you can use to cover your deductible or to pay for treatments and procedures not covered by insurance. It also offers deferred-interest financing for up to 18 months on purchases of $200 or more.

If you go this route, make sure your provider accepts the credit card — and compare the rates and terms with other general-purpose credit cards to see if you’re actually getting a good deal.

Secured loans

Secured loans are loans that require collateral in order to lower the risk to the lender in case of borrower default.

Secured loans can be easier to qualify for than unsecured loans — but in the process, you risk losing whatever collateral you put up if you become unable to make payments.

Looking for more procedure-specific medical loans?

Medical loans can help you afford many kinds of care that either aren’t covered by insurance or come with high deductibles and coinsurance costs.

If you are interested in more procedure-specific medical loans, you can find additional resources below:

• Dental loans
• Personal loans for plastic or cosmetic surgery
• Personal loans for treatment centers and rehab
• IVF loans
• Hip replacement surgery loans
• Breast augmentation cost and financing options
• Tummy tuck cost and financing options

A final note

If you end up with multiple medical loans, you may want to consider medical debt consolidation to save on interest and simplify repayment.