Can you repay your medical expenses with a personal loan?


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You may be able to save money by turning your medical bills into a personal loan with one monthly payment. (Shutterstock)

About 20% of U.S. households have medical debt totaling about $88 billion in medical bills on credit reports, according to the Consumer Financial Protection Bureau. Unfortunately, medical debt is the number one cause of bankruptcy, reports the National Consumer Law Center. If you’re one of the millions of Americans struggling with medical debt, you have several options for relief.

Asking for your supplier’s financial assistance package, negotiating an interest-free payment plan with them, and checking to see if your bills are wrong are all things you can do before your bills spiral out of control. If your debt has already been sold to a collector, you can always try to negotiate a payment plan with them, but a personal loan is also an option.

Credible, it’s easy to view your prequalified personal loan rates from various lenders, all in one place.

Can you use a personal loan to pay your medical expenses?

You can use personal loan funds to pay almost anything, including medical bills. Unsecured personal loans are not backed by any form of collateral, so their use is not as limited as a mortgage might be.

With a personal loan, you will borrow a lump sum of money up front and pay it back over an agreed period of time. Personal loans have fixed interest rates, so your monthly payments won’t change for the life of the loan. You will need to meet a lender’s requirements to qualify, which may include:

  • Credit score — Lenders look at your credit score to see how well you are managing your debt and to determine the interest rate to offer you. Some lenders have minimum credit score requirements that you will need to meet.
  • Revenue – You may need to show proof of income when you apply. Lenders want to make sure you have enough income to repay the loan.
  • Debt-to-income ratio — Your DTI ratio is the percentage of your gross monthly income that is used to pay off your debts. If your DTI ratio is too high, it could signal to a lender that you will struggle to take on more debt.

Visit Credible for compare personal loan rates from various lenders, without affecting your credit.

How to Get a Personal Loan for Medical Expenses

To apply for a personal loan for medical expenses, follow these four steps:

  1. Check your credit score. Before applying for a loan, it is important to know where you stand. You can request free copies of your credit reports from the three major credit bureaus by visiting
  2. Shop around and compare lenders. Get prequalified with several different lenders, which won’t affect your credit score. You will need to be prepared to list the amount of loan you need, your gross annual income, any monthly debts and bills like rent, and a few other identity matters. This gives you an idea of ​​the rates and terms a lender might offer you. If you have good credit, you will qualify for lower rates, but you can also get approved for a personal loan with fair or even bad credit.
  3. Choose a loan and apply. When you formally apply for a loan, you’ll need to answer more in-depth questions about your income and expenses, and you may need to provide documentation, such as bank statements, pay stubs, or W-2 forms.
  4. Receive your loan funds. If you are approved, you will sign a loan agreement and the lender will send your loan funds by direct deposit, wire transfer or mailed check, depending on the loan funding option you choose.

Things to Consider About Personal Loans for Medical Expenses

Before you apply for a personal loan, you’ll want to know the exact amount you need to pay your medical bills. This is the perfect time to dispute any inaccuracies in your medical bills and negotiate with creditors. Ask for an itemized bill from your provider and compare it to your Explanation of Benefits (EOB) from your insurance company. Check for duplicate billing codes, inaccurate billing codes, and discrepancies between what your itemized bill says your insurance paid and what your EOB says your insurance paid.

Even if there are no inaccuracies to eliminate, you should be able to get a discount for paying in full with your personal loan money within a certain time frame. According to NOLO, negotiating a discount for a lump sum payment can save you 20-66% on your medical bills. It may also be possible to negotiate with them to remove the invoice from your credit file if it is in collection. Whatever agreement you reach, make sure you get it in writing from the debt holder.

If you paid for your medical bills with a product like a credit card or home equity loan, you won’t be able to negotiate those bills, but you can still pay them off with a personal debt consolidation loan. Personal loans generally have much lower rates than the higher interest rates associated with credit card debt.

Where to Get a Personal Loan for Medical Expenses

You can get a personal loan for your medical expenses from banks, credit unions, and online lenders. Some lenders specialize in financing medical expenses. If you have good to excellent credit, you will qualify for the lowest interest rates. But many lenders also work with borrowers who have fair or bad credit.

Even if you don’t qualify for a personal loan, you may be able to negotiate a payment plan with your medical provider.

If using a personal loan to pay off your medical bills is the right option for you, Credible makes it quick and easy. compare personal loan rates to find the one that suits your needs.

Advantages and disadvantages of using a personal loan to pay off medical expenses

If you are unable to negotiate an interest-free payment plan with your medical provider and do not qualify for financial assistance, a personal loan could help. keep medical bills off your credit report.

Here are some pros and cons of using a personal loan to pay off medical expenses that you should be aware of:

Benefits of Personal Loans for Medical Expenses

  • You’ll have one bill to pay monthly, instead of tracking multiple bills from multiple healthcare providers.
  • If your medical debt has been sent for collection but you pay it off with a personal loan, it will be removed from your credit report, which may improve your score over time.
  • You will generally receive a lower interest rate than you would get with a credit card, especially if you have good to excellent credit.

Disadvantages of Personal Loans for Medical Expenses

  • Medical providers or hospitals may offer interest-free payment plans for medical bills, so taking out a personal loan and paying interest to borrow money might not make the most sense.
  • You’ll likely pay more over the term of the loan than if you set up a payment plan with your medical provider.
  • Depending on your credit and income history, you may not qualify for a personal loan or you may qualify for a loan with high interest rates.

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