Health-related expenses can add up and sometimes your insurance won’t cover all the costs. When this happens, consider a medical loan. (iStock) The U.S spends twice as much as comparable countries on health, with health care expenses exceeding four trillion U.S. dollars in 2020, as stated in a report titled "Health Expenditures in the U.S.," per Statista. Health System Tracker reported that the cost of inpatient hospital admissions for surgical and health care nearly doubled from 2008 to 2018. With such high costs, it’s no wonder patients seek additional funding to help foot the bill. Even if you have health insurance, paying off medical bills can be a challenge. A medical loan may be an option but there are both advantages and disadvantages to consider. SHOULD I TAKE OUT A LOAN TO PAY MEDICAL BILLS? What is a medical loan? A medical loan is a type of personal loan. The main difference is that they can be used to pay for health care or living expenses while you recuperate. They can also be used to consolidate existing medical debt, pay high co-pays and deductibles or out-of-network charges. Most of these loans are unsecured, meaning you don't need collateral to apply. Many online lenders, banks and credit unions offer these loans at competitive rates and terms, although interest rates tend to be higher than some other types of financing. You also may need good to excellent credit to qualify. When deciding if this is right for you, visit Credible to explore your personal loan options and compare rates and lenders. YOU CAN GET A LOAN WITH BAD CREDIT — BUT BEWARE OF THESE RISKS Where to find a medical loan? Many online lenders, banks and credit unions will offer medical loans. Rates tend to range from about 4.99% up to 35.99%. Terms and amounts also vary, with some lenders offering up to $100,000. And to get the best rates, you will need good to excellent credit. To find the best personal loan rates and explore lenders all in one place, visit Credible. And to get an idea of how much your potential monthly payments could be, use Credible’s personal loan calculator. DO THESE 5 THINGS BEFORE CHOOSING A PERSONAL LOAN LENDER What to consider before taking out a medical loan As with most loans, a medical loan has both advantages and disadvantages. There may be fees, eligibility requirements and funding options to consider. Here are some of the pros and cons a potential borrower should think about: PROS Flexible loan repayment terms. A medical loan generally provides flexible options for repayment. The longer the term, the lower your monthly payments and the higher accrued interest. But interest rates are fixed, so you will make the same payment each month. Use for health-related expenses. A medical loan can be used to cover high deductibles, copays and coinsurance charges, health care-related procedures and living and travel expenses while you’re being treated and recuperating. These are costs that your health insurance plan may not cover completely. Fast funding. It’s not uncommon that you will be asked to pay upfront for most medical procedures. You may not have the money on hand to cover these costs. This type of loan can bridge that gap so you can get the care you need. A benefit of these loans is the opportunity to obtain funds fast with disbursements in just a matter of days, sometimes quicker. Beats credit card rates. The average interest rate for most credit cards in the U.S. has been about 14% to 16% APR since early 2018, according to the Federal Reserve. Right now, the average rate for a credit card that accrues interest is 16.28%. At that rate, paying for health care charges can add up and be difficult to pay back. On the other hand, the average interest rate on many 24-month personal loans is 9.51%. To see if this type of loan is right for you, take a look at your budget and visit Credible to use its personal loan calculator to determine your monthly payments and find the best loan rates. HOW TO FIND THE BEST PERSONAL LOAN FOR YOUR NEEDS CONS High-interest rates. Although rates for medical loans are lower than for many credit cards, they can be much higher than some other forms of financing. If you have equity in your home, a home equity loan or home equity line of credit might offer lower rates. Bad credit challenges. As with most personal loans, you will likely get better rates and terms with good credit. In fact, it can be challenging to qualify if you have poor credit or no credit history. Some lenders may offer you a loan but interest rates will be much higher. Increase your debt. Taking out any loan will increase your overall debt. It can also impact your credit score. If you make on-time payments, your credit can improve. But if you make late payments, you risk lowering your score. Fees. A medical loan, like personal loans, can come with fees and other charges that can add to the cost of your loan. Some lenders charge processing fees, while others may charge origination fees or early prepayment penalties if you pay off the loan early. If you have questions, visit Credible to get in touch with experienced loan officers and get your personal loan questions answered. HOME EQUITY LOAN VS. HELOC: WHICH IS BETTER? Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column. Source: Read Full Article