It’s no secret that medical care is expensive in the United States. The cost for routine doctor visits like checkups and preventative care are already expensive enough, but what about when you need a pricey procedure done?
When that happens, many people opt to take on debt. Before you do that though, there are plenty of better options to consider first. Even if you run through all those choices and still need to take on medical debt, there are better choices for where to get loans for medical bills and surgery than others.
We’ll go through your options so that no matter what your wallet says, you can get the healthcare you need to improve your life.
Best Medical Loans to Consider
There are many different lenders out there that can offer a personal loan to pay medical bills. Here is a comparison of some medical loans to consider.
Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.
- Loan Amount: $1,000 – $40,000
- APR Range: 8.30% – 36.00%
- Loan Terms: 3 – 5 years
- Credit Score: 600 or higher
LendingClub isn’t as widely available as CareCredit; its medical financing options are only available through specific doctor’s offices, which you can find listed on the site.
LendingClub offers two flavors of medical financing: a medical loan program with excellent rates, and a revolving credit program similar to CareCredit’s. On the loan program side, you can finance as little as $1,000, which is handy if you don’t need oodles of money but aren’t yet able to afford the procedure otherwise.show less
- Loan Amount: $5,000 – $100,000
- APR Range: 5.99% – 21.49%
- Loan Terms: 2 – 12 years
- Credit Score: 660 or higher
If paying lots of fees on your loan annoys you, you’ll love LightStream. Not only does this lender offer good rates, but it also doesn’t charge any fees: no origination fees, prepayment fees, or even late fees (although that doesn’t mean you’re free to pay late — there are still other penalties). Using AutoPay may even score you a 0.50% discount on your rate.
Another great feature about LighStream loans is its Rate Beat Program. If you’re approved for another unsecured loan elsewhere within two days before applying with LightStream, you can bring that loan approval to LightStream and they’ll beat that rate by 0.10 percentage points. You can also use a LightStream medical loan at any healthcare provider; it’s not limited to certain doctor’s offices.show less
- Loan Amount: $2,000 – $40,000
- APR Range: 6.99% – 35.99%
- Loan Terms: 3 – 5 years
- Credit Score: 640 or higher
Prosper is an online peer-to-peer personal loan platform that boasts low interest rates and funding as soon as one business day through direct deposit for qualified borrowers after approval. Borrrowers can apply for fixed-rate and fixed-term loans up to $40,000 for their healthcare financing needs.show less
- Loan Amount: $2,000 – $50,000
- APR Range: 7.99% – 35.99%
- Loan Terms: 3 – 5 years
- Credit Score: 600 or higher
Best Egg offers medical loans starting at $2,000 up to $50,000, and can be accessible to borrowers with fair credit. The online lender also offers competitive rates on the low end, but its highest rates are steep for less creditworthy applicants. Also note that Best Egg only allows individual applications, while other lenders allow co-applicants.show less
- Loan Amount: $2,000 – $36,500
- APR Range: 7.99% – 35.99%
- Loan Terms: 2 – 6 years
- Credit Score: 600 or higher
For those with less-than-stellar or poor credit, LendingPoint can be an option for a quick loan. Funding from LendingPoint can be accessed as soon as the next business day upon approval for situations involving any urgent medical needs. The rates can be less competitive than other lenders, but the quick application and approval process makes it a viable option for those who do not have the best credit background.show less
- Amounts: Varies based on your credit
- APR Range: No-interest promotions available
- Loan Terms: Varies
- Credit Score: 620 or higher
The downside of using CareCredit is that you can only swipe it at accepted locations. But the good news is it’s widely accepted at over 250,000 doctor’s offices and retail locations. Indeed, you’ve probably already even seen their brochures or advertisements before at local doctor’s offices.
CareCredit isn’t a loan; it’s a credit card. Moreover, it offers generous interest-free promotional financing deals. Very important: these are deferred financing deals, meaning that you won’t pay any interest as long as you pay it off in full before the end of the promo period. Buried in the fine print, you’ll see that if you don’t, you’ll be back-charged all of the interest you would have paid from the beginning, meaning it won’t save you any money and will probably be more expensive than a loan.
Medical credit cards from CareCredit are tempting to use for ongoing medical-related costs, but remember that deferred financing bit: if you don’t pay off those big charges before the promo period ends, you’ll get slammed with a bunch of interest. If you need a way to finance ongoing costs, a better option might be to consider a low-interest credit card.show less
What Is a Medical Loan?
There’s no official definition for “medical loan,” but most people use it when talking about a credit card or an unsecured personal loan used for medical expenses. An unsecured loan means it’s not tied to any asset like your car or savings account that a lender can take back if you default.
Because of that, unsecured personal loans typically have higher interest rates, but you’ve got another factor working in your favor here. Unlike a general-purpose personal loan, personal loans that lenders give out specifically for medical bills charge less interest and may even have special financing deals. For example, in late July 2022, the online lender LendingClub charged rates as low as 3.99% APR for its medical loans, and 6.34% APR for its general-purpose personal loans.
Uses for Medical Loans
People typically use medical loans to pay for any out-of-pocket healthcare expense they want or need that they can’t afford out of savings. For example, if your healthcare plan pays out 80% of covered costs, you still need to pay 20% out of your own pocket. Medical personal loans can help you afford procedures you otherwise wouldn’t have.
People use medical loans to pay for a variety of things that insurance doesn’t typically cover, including:
- LASIK or other refractive surgery
- Bariatric or weight-loss surgery
- Fertility treatment and IVF
- Gender-affirming surgery
- Plastic surgery
- Any treatment by out-of-network doctors
- Cosmetic dentistry
- Dermatology procedures
- Dental implants and other dental work
- Other medical procedures
Pros and Cons of Medical Loans
- Can make medical procedures that improve your life possible
- Can help you build credit if you avoid making any late payments
- Can usually get your money within a few business days if approved
- Generally cheaper than consumer credit cards, especially if you have excellent credit
- Can be more expensive if you have bad credit
- Taking on medical debt is a last resort compared to more consumer-friendly options
How Much Do Medical Loans Cost?
Most medical loans have two different costs that you’ll need to consider: the annual percentage rate, and the origination fee.
APRs for Medical Loans
The APR range for personal medical loans depends on which lender you choose, your debt-to-income ratio, and more. Many lenders offer rates from around 3.99% to 35.99%, depending on your credit history, although you may be able to find even lower rates with many lenders.
When shopping around for medical loans, remember to compare based on the APR and not the interest rate. The APR includes fees and is a more comprehensive measure of how much the loan may cost you, whereas the interest rate doesn’t include that information.
Origination Fees for Medical Loans
Most personal loans also charge origination fees, usually between 1% and 10% of your loan amount. You’ll need to read the fine print carefully because some lenders take this amount out of your loan proceeds.
That means if you’re paying a 5% origination fee, for every $1,000 you borrow, the actual loan amount you can use to pay your medical bills is $50 less. If your lender does this, you’ll need to calculate how much extra you’ll need to borrow to account for the origination fee.
How to Apply for a Medical Loan
Applying for a loan for medical bills isn’t very different from any other loan. Here are the basic steps:
- Figure out how much you need: Medical bills are particularly tricky because there’s often a lot of back-and-forth between the doctor’s office and your insurance. If you won’t be using insurance it’s relatively easy to ask for an estimate from the doctor, otherwise, you can contact your insurance to see how much, if anything, will be covered.
- Check your credit: It’s always good to check your credit reports before applying for credit to ensure there aren’t any errors. Check your credit score, too, to avoid any unwelcome surprises and help you know which lenders to apply with, such as those with a lower minimum credit score if you have bad credit.
- Shop around for rates: Check your rates on as many medical loans as possible. It usually only takes a few minutes to fill out a form on the website and as long as they do a soft credit check, it won’t affect your credit score at all. Don’t forget to check with brick-and-mortar lenders like banks and credit unions.
- Apply for the loan: Once you find the right loan option for you, apply for loan. During the application process, you may need to provide documentation, such as proof of income and proof of identity. Keep an ear to the wind so you can respond quickly if they need more information.
- Repay the loan: Ensure that you have the funds in your monthly budget to repay the loan. You can sign up for auto-pay on your loan so you don’t ever have to remember to make the payment manually or worry about a late payment.
Alternatives to Medical Loans
Taking out a loan for medical bills can mean the difference between whether you get the care you need or not. But before you jump straight to taking on more debt, it’s important to know that there are many other options to explore first.
They may not all apply to you, but it’s still worth going through this list to check things off first. You may even save thousands of dollars and a lot of hassle in the process.
Ask Your Doctor’s Billing Department About Setting Up a Payment Plan
The billing department at most doctor’s offices are surprisingly accommodating, especially for non-elective or emergency procedures. They know that healthcare is expensive and taking out a personal loan for medical bills isn’t always people’s first line of choice or even an option for many people, especially in light of the COVID-19 pandemic.
If you’ve been hit with a surprisingly-high bill for medical care that you needed, it’s always worth asking your doctor’s office about a payment plan first. You may need to sign a payment plan agreement or agree to automatic payments, but in return, most of these plans don’t even charge any interest, making it a better choice than a personal loan. Learn more about personal loan pros and cons.
Negotiate a Lump-Sum Payment
If you’ve got some cash on hand to pay the bills, but not enough to pay all of it, it’s also worth a try to negotiate a lump-sum repayment with your doctor’s office. Again, this will probably be most fruitful for medical procedures that aren’t elective and couldn’t wait.
Contact the billing department and offer to make a lump-sum payment right away if they’ll accept less than the full amount due. You can start by offering 50% of the bill to leave yourself room to negotiate upwards.
Ask About Financial Assistance
If you’re a lower-income patient, contact your medical provider to see if they offer financial assistance or, at the very least, can refer you to charities that can assist you in paying. In some states, such as Washington, hospitals must offer financial assistance for low-income patients.
Contacting a volunteer through 211.org (or by dialing 211 on your phone) can also help you get connected with any and all programs in your local area that may be able to help. If you have a chronic or expensive condition such as cancer or kidney disease, you can also check with a patient advocacy group to see if they offer financial assistance options.
For some people, it can be humbling to ask for help from charities, but don’t be shy. The help is meant for you, so make sure you use it.
Look for Medical Billing Inaccuracies
According to some groups, over 80% of all medical bills have inaccuracies that can cost you more money than you really owe. That’s why you should always ask for an itemized bill from your healthcare provider to double-check things yourself.
If you’re dealing with a chronic condition and have a lot of medical bills to go through, or you’re unsure how to read them, try contacting a patient medical billing advocate. Many operate on a percentage basis of any money they recover, but not all. If you hire one, ensure you know exactly what they’ll be doing and how you’ll be charged.
Open a 0% APR Credit Card
If you have good credit, not planning on opening any other big loans soon (like a mortgage), and you’re confident you can pay off the debt within a year or two, another option is opening a credit card with an intro 0% APR offer. You’ll get several months to pay off the debt with no-interest financing.
The trick is to make sure paying off the debt stays a priority, since it’s easy to let it sit on the back burner. Once the high-interest rate kicks in, that debt will get a lot more expensive than a personal loan. That’s why it’s a good idea to set up automatic monthly repayment terms for an amount that ensures the debt is paid off before the 0% APR period ends.
Yes, getting a medical loan is still possible if you have bad credit. This means you’ll probably be charged a higher rate than someone with good credit, and the lender may even require that you apply with co-signers.
For most lenders, the pre-qualification process for a loan is the same as checking your rate. This is often available as a form right on the lender’s website. They’ll do a soft credit check that won’t affect your credit score to give you an idea of whether you’ll likely be approved for a medical loan and the rates you may qualify for.
If it’s too confusing to keep up with your different medical bills, debt consolidation can be a good option. That’s especially true if you can get a medical loan for a lower rate than what you’re already paying on your debt.
It depends on how you handle the loan. If you make all of your monthly payments on time, it could help improve your credit score. If you miss any payments or default on the loan, it could cause your credit score to drop by quite a bit.