With rising medical costs, it’s no surprise why 100 million Americans are in healthcare debt. If you’re in this situation, understand that you have options when paying for essential medical services.
A loan for medical expenses is a standard option. This loan will cover your healthcare costs, and you will pay down the loan over a period of time. Here’s everything you need to know about healthcare loans and how to get one.
A medical is an unsecured personal loan, which means the loan doesn’t require collateral. This type of loan has a fixed rate that you pay back over a set period, usually several years.
You can take a medical loan for various healthcare expenses, such as:
Many people also take medical loans if they have a high-deductible health plan, to consolidate existing healthcare debt, and if a procedure results in out-of-network charges.
You can find medical loans from online lenders, banks, and credit unions. Understand that all loans are different, which we will cover more in the next section.
Before signing up for a medical loan, you should do your due diligence and find the best loan to cover your medical treatment costs. Here are some factors to look for.
Some lenders charge an origination fee, an upfront charge to process your loan application. Origination fees can be as low as 1% of the loan amount or as expensive as 10%. Most lenders subtract the origination fee from the loan amount, and you’ll know if your loan comes with an origination fee and for how much.
Annual percentage rate (APR) is a common factor on all loans. The APR consists of the interest you’ll pay and an origination fee (if it applies). They can vary from low rates, such as 6%, to 36%. Those who have better credit scores will get the best APR rates. Comparing APRs is one of the most critical aspects when loan shopping.
Some loans process faster than others. If your medical bills are due and you need a quick loan, you’ll want to consult with lenders to discover how fast you can get your funds. Some lenders can send you the money in a couple of days, while longer loans may take a week to process.
Loans come at a fixed monthly repayment. While the APR rate dictates your monthly payments, the loan term is also a critical factor in affordability.
Shorter loan terms come with higher monthly payments. However, you’ll pay more interest if you accept a loan with longer terms. Therefore, there is no right or wrong answer here. The best option is to choose the loan term that fits your budget and preferences.
Now that you know how to choose a loan, you’re ready to sign up for one. Here are the steps to get a loan.
When shopping for loans, you should know how much you’ll need. First, you should determine the cost of the procedure. If you can, call your health insurance company and the medical clinic to gauge your out-of-pocket costs.
Next, determine how much you can afford. You’ll need to factor in your credit score, APR, and any origination fees to create a monthly budget. There are free online loan calculators there can come up with a general sum for you.
We mentioned this point earlier, but it’s essential to emphasize how your credit score will play a factor in your loan qualifications and your monthly repayment. Knowing your credit score in advance will give you an idea of what you qualify for and your possible APR.
There are many ways to check your credit for free. Most banks and credit unions collaborate with one or all credit institutions to deliver regular credit reports. Credit institutions will also let you check your credit score with them, though you may be limited to the number of credit checks in one year. For example, Equifax gives you six credit reports yearly.
You may be limited in your initial loan search since some lenders won’t offer all the loan terms immediately. This is why pre-qualifying is a good idea. When you pre-qualify for a loan, you will see the amount you receive, the interest rate, and the required monthly payments.
The best part? Pre-qualifying for a loan won’t hurt your credit. This way, you can pre-qualify with multiple lenders and choose the loan that works for you.
Once you decide on a loan, you’ll need to complete an application. The lender will require personal information, such as your social security number, and financial information, such as your income and other assets. Once your lender has that information, they will run a hard credit check and approve you for the loan. Most lenders deliver the funds straight to your bank account.
If your credit score is too low to qualify or you don’t have enough credit, you will have a harder time getting a medical loan. Even if a lender will qualify you, your loan will have some drawbacks, such as high APR rates.
There are still solutions, such as adding a co-signer and reviewing your credit report for errors. You can also find the best loan and rates by pre-qualifying for different loans and shopping around.
If you can’t afford your healthcare costs, you can always get a loan for medical expenses. Medical loans are a good option since they come with fixed rates and no collateral.
If a medical loan isn’t right, you can learn more about lending and financing by reading our blog. Once you decide on the best loan option, you can apply with us at Fast Loan Direct. We offer loans between $100 and $35,000 with fast delivery and flexible APR rates.