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Medical Loans And Other Financing Options for Bad-Credit Borrowers

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Medical loans are personal loans that are used to pay for health care costs, like surgery, hospital bills and dental care. These loans tend to come with high interest rates for borrowers with bad credit, making them an expensive form of medical financing.

You may be able to save money by instead turning to a medical credit card or negotiating with your health care provider. However, in a pinch, a medical loan might be a viable way to cover both expected and unexpected costs. Below you’ll see how medical loans work.

What are medical loans?

A medical loan is really just a type of personal loan. Many lenders do not specifically offer a medical loan product, but do offer personal loans that can be used for just about anything, including paying for a wide variety of medical expenses.

When you take out a medical loan, you receive a lump-sum payment that you can then use to consolidate or pay existing medical bills, or pay for upcoming bills. Because a medical loan usually comes with a fixed interest rate, you’ll know exactly how much you owe each month. In that way, it offers an advantage over using variable-rate credit cards to pay off medical bills.

Still, medical loans for bad-credit borrowers can come with potential downsides. Even though you may receive a longer-term loan to let you make payments over the course of as many as five to seven years (or more), interest rates will be high, so it’s worth exhausting less expensive forms of financing first. In general, rates for personal loans vary considerably, so compare them carefully to make sure you’re getting the most competitive offer.

Pros and cons of medical loans
Pros Cons
  • Interest rate is fixed, so this could be a potentially less expensive alternative to a credit card.
  • Loans can be funded quickly, sometimes the same day of loan approval.
  • Payments are the same every month.
  • Lenders offer a variety of repayment terms.
  • Interest rates can be high, sometimes 35.00% or more.
  • Most lenders have borrowing limits.
  • Fees may be applicable for this product.
  • Your credit score may take a dip from a hard credit inquiry during the application process.
Seek out a cosigner to potentially qualify for lower interest rates: Not all lenders accept cosigners, but if yours does, see if you and a cosigner can prequalify together. You’ll both need to provide a credit score, along with basic income and debt information. If your loan is approved, be aware that if you fail to keep up with monthly payments, your cosigner will need to pay up. Both your credit scores might also take a hit.

3 medical loans for bad-credit borrowers

Medical loans for bad-credit borrowers often vary according to the lender. The chart below compares personal loans for medical financing from three companies. These lenders topped results on LendingTree’s personal loan comparison tool for $5,000 loans that might be available to borrowers with poor credit scores (640 or less).

3 personal loans for financing medical expenses
APR Repayment term Borrowing limit
LendingPoint 15.49% to 35.99% 24 to 48 months $25,000
OneMain Financial 18.00% to 35.99% 24 to 60 months $20,000
Upstart 7.98% to 35.99% 36 or 60 months $50,000

LendingPoint

LendingPoint offers personal loans in the District of Columbia and in all states except West Virginia. The APR starts at 15.49% — a relatively high rate, especially when compared with Upstart. However, LendingPoint is often willing to work with borrowers who have generally poorer credit, by considering factors like job and income history along with credit score.

LendingPoint processes loans relatively quickly, often granting final approval a few hours after a borrower has submitted all paperwork. Borrowers can get their money as soon as the next business day after their loan is approved. There’s no prepayment penalty if you decide to pay off your loan early and save on interest costs. If you need additional medical financing, LendingPoint also offers the potential of taking out a second loan even if your first one isn’t fully paid off.

OneMain Financial

Getting medical financing from OneMain Financial can be expensive. The APR on its personal loans starts at 18.00% — the highest for the three lenders in the chart above. However, if you’re having trouble qualifying for a personal loan, OneMain Financial also offers secured loans, another potential option for bad-credit borrowers. It’s possible to secure the loan with items like a car, camper, boat or motorcycle.

OneMain requires applicants who prequalify online to meet with a loan specialist at one of its branches to verify information like identity and income. However, funding can be fast — borrowers who are approved by noon might get their money the same day. If you prefer to have in-person assistance and make payments at a brick-and-mortar location, working with this lender could be a benefit — it has more than 1,500 branches in 44 states.

Upstart

Upstart works with partner banks to make it easier to apply for personal loans online. It offers the highest borrowing limit of the three lenders in the chart, and also the lowest possible APR for qualified borrowers. The company typically funds personal loans for medical expenses in one to two business days.

You must have at least a 600 credit score to apply for a personal loan from Upstart. However, the company also works with borrowers who don’t have enough credit history to have received a score.

Other ways to pay for medical costs

Negotiate your medical costs

Health care costs aren’t set in stone. If you have a medical procedure coming up, call your provider’s billing department to get an estimate of the cost of the service, then talk to your insurance company to see how much your plan will cover. You can then have an honest conversation about your budget with your provider’s billing department to see if there are ways to bring the cost down. Make sure you get any agreed-upon discounts in writing.

In an emergency situation, you probably won’t have a chance to negotiate your medical costs before treatment. However, you may be able to do so once the bill arrives — especially if you’re uninsured or underinsured and your insurance coverage isn’t enough to cover the bill.

Your provider may be willing to work with you — for example, allowing you to pay a certain amount upfront with cash (or with money from a flexible spending account). Simply asking for a bill reduction or debt forgiveness might help you avoid the need for a medical loan.

CareCredit® credit card

CareCredit® credit card is a medical credit card that you can use to cover the cost of your deductible, as well as pay for medical treatments and procedures from more than 225,000 providers. It offers a standard 26.99% APR, but borrowers may be able to qualify for certain CareCredit promotions. These promotions include access to reduced-APR special financing, as well as a zero-interest financing option if a card balance is paid off within 24 months.

CareCredit doesn’t list credit score requirements at its website. Still, if you’re denied, you may be able to apply for another medical card, like the ones below:

  • Wells Fargo Health Advantage Card: This credit card can be used at thousands of providers nationwide to cover the cost of a variety of medical procedures.
  • AccessOne MedCard: Instead of offering a medical credit card, AccessOne partners with hospitals to provide patients with low- or no-interest loans that are repaid with a monthly bill. AccessOne claims anyone can qualify for this medical financing, regardless of their credit history. Before signing up for the card, make sure hospitals in your area will accept it.

Credit card

If you have bad credit, a credit card might actually be a more cost-effective way to cover medical expenses and avoid having to pay the especially high APRs that might come with personal loans for poor-credit borrowers — which could be 30% or more. The average APR on credit cards is now about 14.58%, with those assessing interest at 16.43%, according to the Federal Reserve.

Some caveats to keep in mind: While personal loans usually come with a fixed interest rate, credit cards mostly offer variable rates only. With a credit card, your APR might change (for better or for worse), making your monthly payments less predictable. You’ll also need to keep an eye on your utilization ratio, which compares how much card debt you carry relative to your credit limit. Using more than 30% of your available credit will likely cause your credit score to drop.

Crowdfunding

High medical costs have spurred many consumers to turn to online donors for help. Researchers at the University of Chicago estimate that 8 million Americans alone have created crowdfunding campaigns for themselves or someone in their household to help cover medical expenses.

If this is an option you’d like to consider, consider the following crowdfunding sites:

    • GoFundMe: You can create a free account at GoFundMe to raise money for health care costs. The campaign itself is also free and can continue to accept donations until you turn it off.
    • CoFund Health: CoFund Health is a crowdfunding platform that raises money for medical expenses only. A special debit card lets you access donations.
    • PlumFund: You can accept both online and offline donations for medical bills with a crowdfunding campaign at PlumFund. PlumFund itself doesn’t charge fees, though a small third-party processing fee will be deducted from online payments.

Grants for medical bills

If you’re facing seemingly insurmountable medical bills, you may be able to access help through a government program or advocacy group. Some organizations offer financial aid or grants for medical bills, while others can connect you to free or low-cost health care service providers.

Here are some options:

  • The federal Heath Resources & Services Administration HRSA health center program can help you find low-cost primary care that’s payable on a sliding fee scale.
  • Insure Kids Now can help you get free or low-cost health and dental insurance coverage for children and teens.
  • The Medical Assistance Tool, from the trade group Pharmaceutical Research and Manufacturers of America, can help you find cost-sharing programs and other resources to potentially lower the cost of medication.
  • The Patient Advocate Foundation runs a donor-funded, co-pay relief program that can help with out-of-pocket medical costs. It also provides small grants for patients in need.
  • The National Organization for Rare Disorders offers assistance programs for people with rare diseases that can help cover the cost of medication, insurance premiums, co-pays, medical tests and necessary travel.
 

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