It’s no surprise that healthcare is extremely costly, and those costs are only going up. According to most recent data, out of pocket spending grew by 10.4% to $433.2 billion in 2021. Though over 90% of Americans have health insurance, 23 million of them owe more than $250 in medical debt, according to Peterson-KFF's Health System Tracker. That means one in 10 adults has medical debt.

Americans are struggling to bear the burden, so loans for medical bills, loans for surgery, and medical financing are becoming more popular. In this article, we’ll cover how to shop for medical loans and other ways to finance medical expenses.

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What is a medical loan?

Medical loans are personal loans for medical expenses, such as emergency care or surgery, that aren’t covered by insurance. Patients often use medical loans when insurance companies won’t cover certain medical costs or only cover a percentage of the cost.

If you find yourself in this situation, this type of loan can be a helpful option when you need to pay for care up front and don’t have the cash.

How do medical loans work?

Medical loans work very much like any other type of personal loan. The applicant will need to apply for the loan, submit themselves to a credit check, and verify their salary. In some cases, borrowers with less-than-perfect credit may be required to get a cosigner or post collateral to secure the loan. Once approved, funding can be accessed quickly, sometimes on the same day.

Related: How Do Personal Loans Work?

How do I use a medical loan?

Medical loans are personal loans, so they can be used for a wide range of procedures, including chemotherapy, fertility treatments, urgent care or emergency room visits, weight loss surgeries, dental procedures, and cosmetic surgery. The funds can also be used for long-term care treatments like physical therapy and rehabilitation. Before taking on a loan, it’s important to make sure the funds can be used for your intended purpose.

Where to get medical loans?

Banks, credit unions, and other financial institutions offer personal loans that can be used to cover medical expenses. Banks typically have higher interest rates and stricter requirements for borrowers than online lenders, so it may not be a great option if you don’t have an excellent credit score. However, they may allow you to sign with a cosigner, which can improve your chances of approval.

Credit unions typically only offer financing to members, but if you are a member, you may have easier access to funding at a lower interest rate as their requirements are a little more flexible.

Online lenders are a third option to explore and are likely where you’ll find the best deal. These lenders often have the most flexible borrower requirements, even if you have bad or no credit. However, rates and terms will still be dependent on the borrower’s credit history.

The important thing is to compare all of your options to find the best personal loan for you.

Reasons you may need medical financing

Even if you have medical insurance, not every procedure or treatment will be completely covered. You may still have out-of-pocket costs to cover due to limits on insurance coverage, or the service may not be covered at all, and you may have to cover the full cost. For instance, in the case of elective surgery, few insurance providers will cover the cost of the procedure or the hospital stay and medications required.

In this case, it’s best to discuss a payment plan with your care provider first. Many hospitals offer payment plans with zero interest, which is a better option than a medical loan.

That said, medical expenses can add up quickly and be difficult to pay even with a payment plan. In this situation, medical financing can help cover those costs.

When is it right to get a medical loan?

Getting a medical loan may not be right for every financial situation, but to help you decide, here’s a list of reasons a medical loan may be a good idea:

  • You’re consolidating existing medical debt. If you have multiple medical bills to multiple providers, getting a medical loan with a low-interest rate can help make it easier to manage your monthly payments, and you can pay off the medical debt before it’s sent to collections. However, if your medical bills don’t have interest, this route isn’t advisable as you would end up paying more in interest charges.
  • You need a service or treatment that’s not covered by insurance. Services or treatments not covered by insurance can be very costly, so using a medical loan to afford it can be an option.
  • You can afford the loan’s monthly payment. It’s important to only take out a medical loan if you can get a low APR (personal loan rates can range from 7-36%) and the payments are affordable. Otherwise, you can get further into debt.

All that said, a medical loan isn’t right for everyone. If you have medical bills that you can’t afford or have a service that isn’t covered by your insurance, start by discussing your options with the hospital or care provider. Many hospitals are willing to work with patients to develop a payment plan that works for them.

Who are medical loans best for?

Medical loans aren’t the best option for everyone. However, they can be a good idea if you have an excellent credit score and solid credit history, allowing you to qualify for the most favorable term and APR.

Other scenarios where a medical loan may be best are if you need treatment immediately but don’t have the insurance or funds to pay for it. Using a loan to pay the medical expenses now is likely better than putting the treatment off. Before taking this route, however, discuss potential payment plans with your care provider, as hospital financing may offer more favorable terms than a loan.

You can also use medical financing to pay for other expenses related to medical treatment or recovery, such as travel.

Is a medical loan a good idea?

Typically, a medical loan is only a good idea if you have a high enough credit score to get a low APR on the loan and you can afford the monthly payments. Otherwise, your credit score could suffer, and you risk the debt being sent to collections. If you can get a low APR and the monthly payments fit into your budget, a medical loan may be smart to help pay for medical expenses not covered by insurance or bills you are struggling to pay.

Pros and cons of medical loans

Fixed interest rate and fixed monthly paymentsInterest payments on loan. Other options may not come with interest.
Prompt approval and fast funding, sometimes same dayHigh interest rates and low approval rates for bad credit borrowers
No limitations on how you use itLoan origination fees
Flexible amounts. Borrow only the amount that you needSmaller loans are hard to find for less expensive procedures

Alternatives to medical loans

There are several alternatives to medical loans that might be a better fit for your situation. However, these options come with their own risks and costs.

Credit Cards:
This is an expensive way to go, but in some cases, it may be the only option. You can use your credit card to pay medical bills if you can’t get a loan, as long as you’re willing to pay the interest charges, which average close to 20%.

Home Equity Loans or HELOCs:
This is a cheaper option from an interest rate perspective, but it puts your home at risk. Home equity loans and HELOCs are secured by the equity in your house. Defaulting could lead to foreclosure.


Payment Plans:
In some cases, the medical provider may be willing to put you on a payment plan. This is common for less expensive procedures, but major surgeries and elective procedures like cosmetic surgery usually require up-front payment.

Medical Bill Forgiveness for Financial Hardship:
Patients experiencing legitimate financial hardships may be eligible for medical bill forgiveness. Ask your medical provider about this or research debt relief options online.

How will a medical loan impact your credit score?

The first way a loan for medical bills will impact your credit score is upon applying for the loan. The application will trigger a hard credit inquiry, which will decrease your score by a few points. This check remains on your credit report for two years, but typically only impacts your score for one year or less.

Then, if you make the loan payments on time, you may see an increase in your score. However, if you make late payments or miss payments altogether, your credit score can significantly decrease. You’ll also see a large decrease if your medical loan is sent to collections for failure to pay.

Medical loans for bad credit

Borrowers with credit scores below 670 may have a more difficult time attaining a loan. However, it’s not impossible. Applicants with scores between 580 and 670 can be approved, but they’ll likely pay a higher interest rate and may only be eligible for smaller loan amounts. You may want to work on improving your credit score before you go this route or consider a cosigned loan.

Pros and cons of medical loans for bad credit

Pay off your medical bills soonerHigh interest rates

Weigh these two factors carefully. It might be a better option to allow the medical bills to go into collections and pay them off later when you can get better loan terms.

How do I qualify for a medical loan?

In order to qualify for a personal loan for medical expenses, take the following steps. It may also be beneficial to get pre-approved at multiple lenders so you can compare interest rates and terms that are tailored to your situation.

Choose the amount
you want to borrow

Check your
credit score
(> 670 is considered “good”)

Research multiple
medical lenders

Select a lender and
submit your application

How do I compare medical loan lenders?

There are lenders that specialize in loans for medical bills. However, most traditional banks and credit unions offer personal loans that can be used for medical expenses, so don’t limit your search to only medical lenders. You can compare lenders using the following four variables:

Interest rates: Interest rates will vary from lender to lender and range from 7% to 36%. Your rate will depend on your credit history, proof of income, and other factors.

Repayment Terms: Personal loan terms usually range between one and seven years.

Loan amount: The amount of money the lender is willing to give you.

Fees: Check the origination fees, prepayment penalties, and any monthly charges you may incur during the life of the loan.

How do I apply for a medical loan?

  1. Choose the amount you want to borrow.
  2. Research and compare multiple lenders and get pre-approved where possible.
  3. Fill out the application. Most medical lenders allow you to do this online.
  4. Be prepared to provide a driver’s license or state ID, proof of income, verification of employment, and access to your credit report.

If you are approved for a medical loan, Leslie Tayne, a New York-based debt resolution attorney and personal finance expert says be sure to read the details of the medical loan carefully. You need to make sure you understand the interest rate and all fees and penalties before you sign.


In most cases, the better your credit score, the better the chance you’ll be approved for the loan and the lower the APR. Typically, personal loan lenders require a credit score of 670 or above. However, some online lenders have minimum requirements of 580 or above, and others don’t have limits at all. That said, you’ll likely have a much higher APR if you have a lower credit score.

Medical debt does not appear on your credit report unless it’s sent to collections. Even then, unlike other types of debt, medical debt shouldn’t affect your ability to get a mortgage. This type of debt is often treated more favorably and differently than non-medical debt.

Yes, a medical loan can often be used for any medical reason, including dental procedures. However, it’s always best to double-check with the lender. If you decide to get a personal loan, it has even more flexibility and can be used for any reason you choose.

Related: Dental Loans

The best way to save on medical expenses is to check with your medical insurance company before any treatment, service, or procedure to ensure it’s covered and understand at what percentage. Be sure to choose in-network providers, as most out-of-network providers aren’t covered. Ask about costs beforehand and learn if there are other options available that may be covered at a greater rate or be less expensive. You can also ask for cash discounts from your provider or inquire about affordable payment plans.

A debt consolidation loan through a bank, credit union, or online lender is likely your best option for medical debt consolidation. However, other options include a home equity loan or HELOC, a credit card balance transfer, or even debt settlement. Be sure to check interest rates and other terms and conditions before choosing an option to find the best one for you.

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Learn more: IVF Loans

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