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A comprehensive guide to medical loans is key as caring for one’s health should always be a priority, as good health is priceless.
However, getting the needed care when one falls sick can sometimes get expensive, especially if it includes some special medicines and procedures.
Often, people put money aside for a medical emergency, in the form of medical insurance plan but in some cases, the insurance plan would either not cover the kind of ailment that one is battling or there would be a need for special procedures that would have to be calculated separately.
This would mean that one has to come up with the rest of the balance if one hopes to get better.
In situations like this, medical loans can be a lifesaver, as long as one’s finances are in order and one qualifies for them.
However, before deciding to get a medical loan, it is important to understand the nitty-gritty of how it works, the types that exist, and other relevant details.
To help smoothen the ride, here’s a Comprehensive Guide To Medical Loans.
What is a Medical Loan?
A medical loan is an unsecured form of personal loan borrowed specifically to cater for medical costs like surgery, emergency procedures, hospitalization bills, drugs, and so on. Since a medical loan is unsecured, you would need to have a good credit score to get a great interest rate.
In some cases, if your credit score is bad, a lender may request collateral, which will make the loan a secured one. The downside of a secured medical loan is that your inability to repay the lender at the end of the loan term will result in a loss of the property.
A medical loan can also be used for medical debt consolidation or to pay medical insurance deductibles that you can’t afford.
Like many other types of loans, you can get a medical loan from banks, online lenders, and credit unions.
A Comprehensive Guide To Medical Loans: How Do I Apply For A Medical Loan?
After you’ve decided that getting a medical loan is the right option for you, the next thing is to follow the steps below to get one.
1. Choose an amount to borrow: The first step in applying for a medical loan is to take a look at the medical costs on ground, how much would be required to adequately cater for them, and how much you can afford to pay back. This will help you decide on the amount to borrow.
2. Peruse your credit score: If you have a bad credit score, work on improving it, as a good credit score guarantees a great interest rate.
3. Look for and compare lenders: Once you’ve sorted out your credit score, the next step is to look for and compare numerous lenders, so you can find one with great interest rates and favorable repayment terms.
4. Apply: After comparison, the next step is to pick a lender that you like and fill out a loan application. You will need to show testament of employment and income, proof of identity, proof of address, and your debt-to-income ratio to assess your repayment ability.
Things To Consider When Choosing A Medical Loan
Before deciding to accept a medical loan from a lender, it is important to consider the following factors:
1. Consider the Annual Percentage Rate (APR) of the loan.
2. Confirm if the interest rate on the loan is a fixed rate or a variable one.
3. Find out the origination fee.
4. Inquire about and peruse the loan term to ensure that it is favourable.
When do I Consider Taking a Medical Loan?
Applying for a medical loan is a huge decision that needs to be thought all the way through before taking. This is mostly because like any other type of loan, medical loans have the tendency to increase your debt and ruin your credit if you don’t pay them back.
You should only consider taking a medical loan if you need to undergo a life-saving procedure and your medical insurance either doesn’t cover the procedure at all or can only cover a portion of it. You can also take it if you don’t have a medical insurance at all.
Also, before you apply, decide on how much you want to apply for, based on the amount needed and the amount you can afford to pay back without straining your budget.
Upsides of Medical Loans
- Medical loans are quickly disbursed, so you can easily use it for medical emergencies.
- They usually come with flexible repayment terms.
- They can be used for medical debt consolidation.
- Most of the time, they don’t require collateral.
- They can help to build your credit if you’re not tardy with your payments.
Downsides of Medical Loans
- They can ruin your credit if you don’t make payments on time.
- They can add to your existing debt and put an even greater financial burden on you.
- You will need to have a great credit score to qualify for a loan with a low-interest rate.
- They may come with high fees and penalties.
Alternatives to Medical Loans
If medical loans are not the right fit for you, either because you don’t qualify for them or because they don’t make sense for your situation, you could always consider some alternatives.
1. Credit cards: In lieu of applying for a medical loan which will come with a particular additional amount as interest rate, you could always go for credit cards, as lenders offer medical credit cards with an introductory zero-interest rate. Just like any other credit card, you can charge your medical expenses to a medical credit card and settle your bills. However, it is advised to peruse the terms of a medical credit card before accepting it, to avoid any kind of surprise.
2. Payment plans: Before considering a medical loan, you could ask the medical center where you’re about to get the treatment if they have a payment plan that can help your situation. Some medical centers offer patients certain payment packages to help ease payment, and some don’t even ask for interest.
3. Crowdfunding: This is a popular platform that people use to gather money for essential items or procedures that they can’t afford. You could always access platforms such as CoFund Health, GoFund Me and Plumfund, and others to drum up donations for your medical bills.
Medical Loans for Bad Credit
Although it is usually required to have good credit when applying for a medical loan, having bad credit doesn’t necessarily hinder this goal. It just means that you won’t be able to get an unsecured medical loan.
If you have bad credit, lenders can still consider lending you money, you will just need to put down a property of yours as collateral, to assure the lender that you will repay the loan.
The downside of getting a medical loan when you have bad credit is that you risk losing your property if you are late with your payments.
Medical Loan Closet?
A medical loan closet is a program where good medical equipment are lent to people who need it without charging them a dime. This is a common practice because most medical equipment are costly and are often needed for just a short period of time.
How Does a Medical Loan Closet Work?
How it works is that people donate medical equipment that they no longer need to a loan closet, usually a non-profit organization, the loan closet then cares for the equipment and prepares it for someone else who might need it. The equipment is either given away or loaned out for the duration that the person needs it, and when it is returned, the same process is repeated.
Medical equipment that are loaned usually include:
- Knee scooters.
- Grab bars.
- Unused adult diapers.
- Blood pressure monitors.
- Bed rails.
- Non-motorized wheelchairs.
Medical School Loans
Generally, attending a medical school costs an arm and a leg, which is why it is not surprising that medical school loans exist to help students pay for tuition and other related expenses.
However, as a student, it is smart to know the types of medical school loans that exist so you can know which one packs the most benefit for you.
Basically, there ate two primary sources of medical school loans:
- Federal Loans.
- Private Loans.
Federal loans are loans granted by the government and usually have lower and fixed interest rates. Unlike private loans, a part of federal loans are sometimes subsidized and the federal student loan forgiveness program could end up relieving you of the debt.
Medical students who are hoping to get federal loans should fill out a Free Application for Federal Student Aid (FAFSA).
Types of Federal Loans for Medical School
1. Direct Unsubsidized Loans: These loans are taken to cater for the cost of higher education for both undergraduates and graduates at a four-year college. Other educational institutions that it covers include community college, trade school, and technical school. One of the different upsides of direct unsubsidized loans is that you don’t necessarily need to present proof of financial need before you can qualify for them. Also, it is unsubsidized in the sense that students who take the loan will be the ones to pay any interest added throughout the loan.
2. Direct PLUS loan: This federal loan is taken by graduate or professional degree students to help cater for their education costs. They usually have a fixed interest rate and the student will have to be the one to pay any interest that is added to the loan.
If for one reason or the other, you don’t qualify for a federal loan, which is usually the best option, you can always go the route of private loans. You can make research on private lenders with great interest rates and favourable repayment terms, make comparisons, and then decide on which lender has the kind of package that will suit your financial needs.
Private loans sometimes carry variable interest rates, and you might need a co-signer before you can get one. You can get these loans from banks, credit unions, or online lenders.
Good health is priceless, so it is understandable to be willing to go to any length to repair or preserve it. If you’ve decided that getting a medical loan is the best option for you, the next step is to digest this Comprehensive Guide To Medical Loans and proceed to get one.