Medical Loans

Yes, a personal loan can be taken out to pay for virtually anything. It’s unsecured, meaning there’s no collateral. Personal loans for medical bills are backed by your promise to repay the lender, and as a result, interest rates can be higher than they would be for a secured loan, which uses an asset as collateral.

A medical loan is a type of personal loan, so it falls under the same guidelines. Without good credit, you may have trouble qualifying for a personal loan at all. If they are approved, those with bad or no credit will pay much higher interest rates than a person with a strong credit profile. 

Certain lenders grant personal loans specifically for good, fair or bad credit.

As soon as you get your hospital bill, call the provider’s billing department. Many medical offices offer bill reduction and sometimes even forgiveness, depending on your ability to pay the balance. 

Some hospitals even have financial assistance programs to help people who can’t afford the care they need. You may qualify if you’re uninsured or if you owe a significant amount after insurance.

There are a few things you can do if you can’t afford your medical bills:

• Negotiate the balance down with the hospital’s billing department
• Open a personal loan to pay the balance
• Pay your medical bills with a credit card

First, you can contact your creditor’s billing department (like the hospital, lab or doctor’s office) to try to negotiate the balance down. Hospital bill reduction is common, so give this a try before exhausting your other options. You may also be able to set up a no-interest payment plan through the medical provider. 

Another option is to open a personal loan to pay your medical bills. You’ll end up paying interest on a personal loan, which means that the bill will cost more over time. And if you have poor or no credit, you may not qualify for a personal loan at all. But if you need quick funding and want a set monthly payment, then a personal loan can be a good option.

Finally, you can pay with a credit card. Some doctors’ offices partner with medical credit card companies, like CareCredit, which offer deferred interest for a set amount of time. However, if you miss payments or don’t pay off the balance by the end of the grace period, then you’ll end up paying interest and penalties.

Medical bills are a civil debt, so it’s not a crime if you don’t pay them. However, you may go to jail for ignoring a court summons, depending on the state in which you live. This happens when you’re sued by a collector, such as a hospital or ambulance service, and you ignore your court date.

Mortgage lenders look at a number of factors: your credit score, your recent mortgage applications, your job changes. But most importantly, they look at your debt-to-income ratio. Medical debt does factor into your DTI. 

Unpaid medical debt can also have a negative effect on your credit score, which can affect your ability to qualify for a mortgage.