Best Medical Loans of April 2024

Medical debt remains an aching problem in the U.S. In fact, it's the most common cause of personal bankruptcy. If you're having trouble paying medical expenses, a medical loan may be the answer. If the idea of taking on new debt to rid yourself of old debt strikes you as picking your poison, that's natural. Here, we'll break down how a medical loan can help you get out from under the pressure of collection calls. We'll also outline when a medical loan is a good idea and when it's a bad idea.

A medical loan is a personal loan that you choose to use to cover medical expenses. The same personal loan used for debt consolidation or to remodel a kitchen can be used to cover medical costs. Medical loans can (usually) pay for anything, from medical treatment to equipment financing. They are typically unsecured loans, meaning no collateral is required to secure the loan. You receive the loan as a lump sum and pay it off in monthly installments.

People with the best credit scores qualify for the best loan terms. But even if you have an average or poor credit score, there are medical and surgery loans available. Borrowers with excellent credit scores are offered the lowest interest rates. If your credit score is lower, you may pay more in interest. Nevertheless, if a loan allows you to pay off medical bills and you can afford the monthly payment, these loans are worth considering.

One thing to keep in mind if your credit score is currently low: Making each loan payment in full and on time each month is an excellent way to raise your score.

Since each borrower has a different set of needs, there is no one-size-fits-all medical loan. Still, there are characteristics that all good loans share.

The best medical loans have:

• Low interest rates: The lower the interest rate, the less your medical debt will end up costing. For example, if you were to borrow $5,000 at 6% interest for 48 months, you would pay a total of $636 in interest. If you borrowed the same amount (also for 48 months) at 10% interest, you would repay $1,087 in interest.
• Reasonable repayment terms: For example, if you have worked your budget and realize you need at least 36 months to repay the loan without straining your finances, the right loan will offer you at least 36 months. The best medical loans offer a wide range of repayment terms that allow you to find a loan you can afford.
• Low fees: When you borrow money to pay medical bills, you don't want to be hit with a lot of fees. While some lenders charge an origination fee of up to 10%, the best surgery loans do not.
• Unemployment protection: If the pandemic taught us anything, it's that most of our jobs are not guaranteed. The best medical loans will defer your payments if you lose your job through no fault of your own. This is known as "unemployment protection."
• No prepayment penalty: If you're able to pay your loan off early, you need a medical loan that will allow you to do so without a prepayment penalty.

Medical loans are a good idea when:

• You don't have a lump sum available to pay medical bills.
• You're working with a reputable lender with eligibility criteria that makes you a shoo-in for loan approval.
• You can afford to repay a loan in monthly installments.
• You have a clear plan for using the loan. For example, you know how much will go toward the debt and how much you will need for living expenses as you recover.

Medical loans are a bad idea when:

• You already have trouble paying your monthly bills.
• Your credit score is too low to qualify for an interest rate you can afford.
• You have not worked with the medical provider directly to lower the bill. Some will forgive part of your debt or allow you to make interest-free monthly payments through them. It all begins with negotiating with your medical provider(s).

Taking out a personal loan to pay medical expenses may be the right move for some. However, there are alternatives, including the following options.

Medical credit cards

Many Americans who can't pay their out-of-pocket expenses sign up for a medical credit card instead. Most of these cards offer 0% or a very low interest rate for a promotional period. Medical credit cards can be useful if you pay them off before the promotional rate expires. Be aware that some medical credit cards offer deferred interest, which is different from a 0% introductory APR period. If the interest is deferred and you do not pay off the debt before the end of the promotional period, you may be required to pay interest going back to the date of your original charge.

0% introductory APR credit cards

There are few deals better than a 0% introductory APR. If your credit score is strong enough, apply for a credit card with a 0% intro APR offer, use it to pay off medical debt, and repay the balance before the promotional rate expires. When the promotional period is over, your credit card interest reverts back to its "regular" rate. Promotional rates normally last from 12 to 18 months.

Negotiate with your medical provider

It is no secret to medical providers that their patients frequently have trouble paying bills. Medical care is expensive, and insurance is often lacking. Fortunately, you should be able to negotiate a medical bill. Call the billing office that sent you the bill and explain your situation. Ask them if they can reduce the total due. Also, find out if they have a forgiveness program. At the very least, come up with an amount you can afford to pay toward the bill each month and let them know that you would like to enter into a repayment plan. Once they agree, keep up your end of the bargain by making each monthly payment as promised.

A medical loan is right for you if you need help paying off medical debt and can find terms that work with your budget. If so, medical loans offer a way to pay off medical debt, control how much that debt costs each month, and know when it will be paid off.

It's tough to find anything positive about medical bills or the need to take out medical loans. Still, it is good to know that you have options to finance medical expenses.