Medical Bill Loans – Should You Get One?
Health problems are life’s unwelcome guest. But try as we might to avoid them, they still have a nasty habit of rearing their heads when we least expect it. Even if you have a good health insurance policy there are still many things that may not be covered and deductibles alone can devour all your available cash in a hurry. Unexpected medical bills can undo carefully constructed finances, require the liquidation of assets and have a devastating effect on your overall quality of life. But it doesn’t have to be so. Medical loans can help to mitigate the potential damage caused by medical bills. Let’s take a closer look at these important financial products and how they can help you.
First Things First: What are Medical Loans?
Medical expenses can quickly get out of hand. As a result, you may find yourself in an uncomfortable, untenable financial position. Some people respond by liquidating assets. Others simply let the debt slip into collection and then endure years of negative consequences. But there’s another solution that many are not aware of: medical loans. A medical loan is a type of personal loan that can be used to cover medical expenses related to a wide range of procedures both necessary and elective.
Medical loans may be either secured or unsecured.
- Unsecured loans to cover medical expenses may be more difficult to obtain for those who have poor credit or unstable income. Difficult, but not impossible. If you have a pristine credit history and sufficient income it’s very likely you can obtain a personal loan for medical expenses without having to offer collateral.
- Secured loans are typically easier to obtain provided you have the necessary collateral. Keep in mind that if you’ve been offered an unsecured loan you may be able to obtain a lower interest rate if you opt for a secured loan instead. The only danger being that if you default on the loan you will lose whatever it was you put up as collateral.
There are a number of different types of lenders that offer loans for medical bills. Some make it very simple to get the process started by allowing you to apply online. Although you’ll need to appear in person to finalize the loan agreement.
Are There Any Alternatives to Medical Loans?
As we mentioned earlier some people will liquidate assets to pay for medical expenses. Although that approach is typically reserved for genuine emergencies and not elective procedures. But selling your prized possessions is not the only house on the block when it comes to alternatives to medical loans. Here are some other options:
- Explore reduced-cost care – Those who are experiencing a particularly difficult time financially may qualify to receive their medical care at a reduced rate. This, of course, only applies to necessary medical procedures and not elective ones. Most large hospitals have active financial assistance programs in place to address the needs of the most financially challenged. Even if they determine you do not qualify for reduced-cost care they may offer an attractive long-term repayment plan that can help soften the pain.
- Ask for a discount – Good things often come to those who ask for them. Many people don’t think to ask for a discount but in certain circumstances, it may be possible. Even if you do not qualify for the financial assistance plan offered by the hospital they may be open to simply discounting your bill by a given percentage. This is especially true if you are uninsured and paying for your own care. Again though, this will not apply when it comes to elective procedures.
- Pay with a credit card – There are two ways you might want to consider paying with a credit card. The first is to simply take your existing card out of your wallet at the hospital and charge everything. The other way is to apply for a low or no-interest credit card and use that to absorb the medical bill. This type of card is similar to a medical credit card in that they both typically offer a period during which you will not incur any interest on the debt. You will need to have outstanding credit to obtain this type of card. But if you do, and you are able to pay off the debt before the no-interest period expires, this can be a very sound financial choice.
- Pay with a medical credit card – As we just mentioned this type of card shares similarities with the zero-interest credit card. There are usually a couple of subtle differences though. First of all, they’re normally only available through your healthcare provider. And second of all, they can only be used to pay qualifying medical bills. Whereas a standard zero-interest credit card can be used to buy whatever you like.
- Examine your bill closely – Hospitals are like grocery stores or any other type of business. They sometimes make mistakes on your bill. Even if you think you’ll be able to pay off the medical bills without help it’s in your interest to go over any bills with a fine-tooth comb and look for inaccuracies. Were you charged for medicine you didn’t receive? Were you charged for an extra night’s stay? Are there other errors, oversights or inaccuracies? There may not be. But if there are you’ll be very glad you took the time to review things before paying.
The Pros and Cons of Medical Loans
Everything has an upside and a downside. Let’s take a quick look at the pros and cons of medical loans.
- No long wait to access your funds – This type of loan is often disbursed within a couple of days of approval.
- Possibly cheaper than using a credit card – If you have good credit it’s entirely possible you can get a lower interest rate on a personal loan than what you’re paying on your credit card.
- Versatility – You can apply for a medical loan for just about anything, necessary or elective. And that includes elective dental work such as implants or anything else.
- They can be expensive – Some borrowers with perfect credit may qualify for a low-interest rate medical loan. Those with less than perfect credit, however, are likely to pay a high-interest rate.
- They take negotiating off the table – Whereas it may be possible for you to negotiate with a hospital to reduce your medical bills, hospitals typically will not negotiate if you’re paying with a credit card or loan.
- It’s one more thing to keep track of – Modern life is hectic enough without adding one more payment to remember every month.
Medical loans are not the perfect solution in every case. And in fact, if you can afford to pay your medical bills without one that is usually the better path to take. However, if medical bills are causing you to consider some tough choices, a medical loan may be the best way to retire those bothersome bills.
The Bottom Line
Medical bills can undermine your quality of life while not paying them can have long term negative ramifications for your financial situation that you’ll be wrestling with for years. If you find yourself facing medical bills with no obvious way to pay them off consider a medical loan. The can often be applied for online, they tend to disburse the money to you without significant delay and if you have good credit you may get a very attractive interest rate.