Although Americans are legally required to have health insurance, CBS news reports that a survey conducted by Transamerica found that people between the ages of 18 and 34 represented 44 percent of uninsured Americans as of July 2014. If you have health insurance, the reality is that deductibles, co-payments and charges disallowed by your health insurance company can quickly add up. The Consumer Financial Protection Bureau reported in December 2014 that 43 million U.S. consumers have past due medical debt in their credit reports. A personal loan or medical loan can help you pay off medical expenses not covered by insurance, and may also prevent additional problems when medical bills are sent to collection agencies for non-payment.

Medical Loan: Find Your Best Option

Unsecured personal loan: Taking out an unsecured personal loan for paying medical expenses can provide a low-cost alternative to running up your credit card balances to pay for medical expenses. Ask your financial institution or shop online for a personal loan. Unlike a home equity loan or line of credit, a personal medical loan is not secured by your home and you won't risk foreclosure if you can't repay on time.

In-house financing/medical credit: Some care providers may offer in-house financing but these options can carry very high interest rates and fees. When you're ill or hurt is not the best time to make financial decisions, so don't be pressured into accepting financing without an opportunity to shop and compare costs for personal/medical loans.

Personal line of credit: If you're planning a series of medical procedures, a personal line of credit can help you budget and control medical costs. You can draw funds against a personal credit line as needed and will only pay interest on funds you've withdrawn. Pay attention to interest rates and fees charged for accessing your credit line. A personal credit line has to be repaid within a specific period; otherwise additional fees can accrue for renewing or replacing your line of credit.

Reasons You May Need Medical Financing

  • Dental loans, veneers, or orthodonitics
  • Adoption loans, helping to cover adoption expenses
  • Cosmetic surgery loans
  • Infertility treatment, invitro fertilization
  • Hair loss replacement, hair restoration
  • Weight loss surgeries, like gastric bypass or bariatric procedures

Tips for Success

  • Check out different types of personal loans to find the one that best meets your needs for paying medical debt. Once you've chosen a type of financing, compare rates, terms, and costs. Compare the annual percentage rate or APR for each medical loan you're considering; the APR includes the interest rate, costs, and fees expressed as an annual percentage of the loan amount.
  • When you review loan quotes for personal/medical loans, make note of questions and concerns for each quote. Contact the lenders and ask for clarification or more information if needed. Before selecting a lender, make sure that your questions have been answered fully and to your satisfaction.
  • Know the difference between personal loans and payday advances: Personal loans are widely available through mainstream financial institutions such as banks and credit unions. Payday loans are designed to provide funds for a few days or weeks and are very costly due to higher risk of not being repaid on time. If you can't obtain a personal loan, ask your medical care provider about a repayment plan. Although you may pay late fees, this option is likely cheaper than borrowing a payday loan to cover medical expenses.

Always make payments on your medical loan on time. FICO reports that 35 percent of your credit scores are based on your payment history.

Frequently Asked Questions