Are you considering medical financing? You have many options to compare when looking for the perfect aid to cover your bills. Staying healthy is priceless but paying for healthcare can drain your finances. Health insurance may cover part of the bill. Any remaining balances will be recorded under your medical debt. A medical loan can pay for such debts and other healthcare-related expenses. Here are four things to know before getting financing:
1. How Medical Financing Works
You should understand what medical financing is and how it works before applying for loan products. A medical loan finances expenses like surgeries, routine treatment, ER visits, and dental procedures. Most lenders offer unsecured personal loans for such treatments, but you’ll need a good to excellent credit score. The lender may require collateral to secure your medical loan if you have fair or poor credit.
You can find financing from the usual lenders; banks, online lenders, and credit unions. The loan can finance cosmetic surgery, dental work & orthodontics, treatment for vision/eye problems, and prescriptions. You can also use it for weight loss treatment, fertility issues, and consolidating medical debt. Most loans cover specific treatments, so check with the lender during application to determine if the loan covers your treatment.
2. The Main Benefits of Financing
The primary benefit of a medical loan is covering your medical bill while providing a manageable repayment plan. You’ll receive fast funding when healthcare facilities need an upfront payment for specific procedures. The loan can also consolidate your medical debt, so you can have a single loan instead of multiple bills. Consolidating your loan may also attract a lower interest. Here are more advantages of taking a medical loan:
- Flexible Repayment: Most medical loans come with flexible terms, including longer repayment periods with lower monthly payments. You can also choose shorter terms with higher installments and less accrued interest. A medical loan can also help you avoid negative impacts on your credit report.
- Easy Qualification: Qualifying for a medical loan is easier than most loans. You must prove you need the funds for a specific medical procedure or prescription. If you have an excellent credit score, you’ll attract bigger loans and better terms. Lenders also accept collateral for applicants with bad credit.
- Better Finance Options: A personal loan for medical reasons may offer better finance options and rates than direct financing through the healthcare provider. You can also use the loan for related expenses like the cost of living during treatment and recovery. Payments are also released sooner, and you don’t have to wait for the healthcare plan to determine if the cost is covered.
3. The Potential Drawbacks of Medical Loans
Knowing the potential risks of medical financing is just as important as identifying the benefits and how it works. A medical loan is another debt and comes with interest. Your credit may suffer, compromising your chances of receiving future loans. Apart from increasing your monthly bill, a medical loan can impose high fees and penalties if you don’t pay on time. You also need a good or excellent credit score, or you’ll attract higher interest rates.
4. Key Considerations When Taking a Medical Loan
Not every medical loan is a great offer; carefully review each agreement. Never let the pressures of unpaid medical expenses force you into rushing your decision and taking a bad loan. Here are factors to consider before getting financing:
- The Annual Percentage Rate: The APR refers to the cost of borrowing a loan and includes the fees and interests you’ll pay. APRs vary from lender to lender, and a higher credit score will attract better rates.
- Fixed Vs. Variable Rates: A fixed rate allows you to pay the same monthly installment for the cost of interest. Variable rates involve payments that rise or fall based on the market. You can determine which option is better based on your financial position.
- The Origination Fee: Most lenders charge a one-time origination fee to cover the cost of processing the loan. Some lenders don’t have such fees but may have higher rates, so you should review all aspects of the loan.
- The Loan Term: Some loans offer longer repayment terms, which translates to low monthly bills, but you might pay more interest. Other loans offer shorter periods with higher monthly payments and less interest.
- Loan Disbursement Duration: Determine how quickly the lender releases funds before applying for a loan. Some lenders release the funds within the same day, while others require a couple of days.
Medical financing can provide enough funds to cover your procedures, treatment, prescriptions, doctor visits, and related healthcare expenses. Before you take a loan, review your budget, finances, and loan terms thoroughly. The goal is to get financial aid without plunging yourself into massive debts. Choose a reputable lender with a clean track record.