National healthcare spending grew 4.2% to $4.3 trillion in 2021. This was a bit of a slowdown compared to the nearly 10% growth we saw in 2020 for spending as the COVID cases and hospitalizations slowed down, however this doesn't mean that people aren't struggling when it comes to covering their medical expenses.

Healthcare costs in general are just significantly more expensive than they were 50 years ago ($394 billion compared to over $4 trillion today.) According to Peterson-KFF's Health System Tracker, though over 90% of Americans have health insurance, 23 million of them owe more than $250 in medical debt. 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.

Find & compare the best medical loans in 2022 for all your health needs

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4.49% - 20.49%

Est. APR Range

$5,000 - $100,000

Loan Amount

2-20 years

Loan Term
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Good For: Offers longest loan term, no fees

Good For: Offers longest loan term, no fees

6.99% - 22.28%

Est. APR Range

$5,000 - $100,000

Loan Amount

2-7 years

Loan Term
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Good For: High loan amounts available, no fees

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5.94% - 35.97%

Est. APR Range

$1,000 - $50,000

Loan Amount

2-7 years

Loan Term
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Good For: Low loan amount

Good For: Low loan amount

5.99% - 35.99%

Est. APR Range

$2,000 - $50,000

Loan Amount

3-5 years

Loan Term
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Good For: Low min. APR for bad credit score

Good For: Low min. APR for bad credit score

9.95% - 35.99%

Est. APR Range

$2,000 - $35,000

Loan Amount

2-5 years

Loan Term
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9.99% - 35.99%

Est. APR Range

$2,000 - $36,500

Loan Amount

2-5 years

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18% - 35.99%

Est. APR Range

$1,500 - $20,000

Loan Amount

2, 3, 4, 5 years

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What is a medical loan?

Medical loans are personal loans for medical expenses, such as an emergent or planned procedure. They’re a good option if you need money quickly and are required to pay for medical care up front. Patients often use them when insurance companies won’t cover certain medical costs or only approve payment for a percentage of what’s being charged for medical procedure financing.

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 for medical expenses, 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 the same day.

Related: How Do Personal Loans Work?

How do I use a medical loan?

Medical bill 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. Be sure to compare the best medical loans for surgery, especially if it is a major procedure.

Where to get medical loans

Banks and credit unions are financial institutions that offer personal loans to borrowers. Banks typically have higher interest rates and more strict requirements for borrowers, so it may not be a great option if you don’t have an excellent credit score. A credit score for medical loans needs to be strong. However, if you’re an existing customer, they may be able to be more flexible.

Credit unions typically only offer financing to members, but their requirements are a little more flexible and they can be a good option if you don’t have excellent credit. They may be able to take other factors into consideration to get you a lower APR.

Online lenders are a third option to explore, and are likely where you’ll find the best deal. These lenders often have the lowest APR, better terms, and the most flexible borrower requirements, even if you have bad or no credit.

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. Sometimes you may still have out-of-pocket costs to cover because there’s a limit on the insurance coverage, or the service may not be covered at all and you must pay the full cost. Costs can add up quickly and be difficult to pay, but medical financing can help cover those costs so you don’t have to drain your bank accounts.

Related: Reasons to get a personal loan

When it’s 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. Medical debt doesn’t typically have interest charges, but 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.
  • You can’t afford medical debt payments. If you have medical debt payments that you can’t afford, to prevent the debt from going to collections and tanking your credit score you can use a medical loan to pay them off. Then, you only have to make the medical loan payment.
  • 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 and the payments are affordable. Otherwise, you can get further into debt.

Who medical loans are 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 if you need treatment immediately but don’t have the insurance or funds to pay for them. Using a loan to pay the medical expenses now is likely better than putting the treatment off. You can also use this 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 if you can afford the monthly payments. Otherwise, your credit score will 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

ProsCons
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. Some of these come with a higher risk and others might cost more in interest payments.

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 a medical loan will impact your credit score?

The first way a loan for medical bills will impact your credit score is because applying for the loan 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 affects your score for a short period of time.

Then, as long as you make the loan payments on time, you may actually 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 are considered “bad credit borrowers” by most lenders. That doesn’t mean you can’t get a loan. Applicants with scores between 580 and 670 can be approved, but they’ll 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.

Pros and cons of medical loans for bad credit

ProsCons
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?

A medical loan is a personal loan, so it 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.

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, but most traditional banks and credit unions offer personal loans, so don’t limit your search to strictly medical lenders. The comparison should be made using the following four variables:

Interest rates:

Borrowers with lower credit scores may be charged higher interest rates, but it varies from lender to lender.

Repayment Terms:

One of the benefits of choosing a personal loan to pay medical bills is that you can choose the loan term. It usually ranges between one and seven years.

Loan amounts:

Many lenders don’t do smaller loans under $600, so you may need a different option. We’ll cover that in our “alternatives” section below.

Fees:

Check the origination fees and any monthly charges you’ll incur during the life of the loan. Use those as a comparison point between lenders.

How do I apply for a medical loan?

  • Choose the amount you want to borrow.
  • Research multiple loans for medical lenders.
  • Fill out the application. Most medical lenders allow you to do this online.
  • 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.

FAQs

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

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 be used for any reason. Because it’s a personal loan, it has much more flexibility and can be used as either a medical emergency loan or for elective procedures.

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 less expensive. You can also ask for discounts.

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, 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.