Best medical loans

Many Americans struggle to afford medical care, with or without insurance. According to a study from KFF, Americans owe a collective $220 billion in medical debt, with approximately 20 million people contributing to this total. You shouldn't have to put off the care you need, and a medical loan may be able to help.

Medical loans can be a lifeline if you need help with out-of-pocket expenses for upcoming procedures or have unpaid debt you want to consolidate. However, there are other forms of medical financing you should explore before taking out a medical loan to cover your bills or balances. We'll go over how medical loans work, their pros and cons, and if they're the right choice for you.

Compare medical loan rates

What is a medical loan?

A medical loan is often an unsecured personal loan you can use for medical expenses. But it can also be a home equity loan if you have a home with sufficient equity to qualify. If you're funding ongoing care instead of a one-time deductible payment or procedure, a home equity line of credit (HELOC) or personal line of credit are two other options.

Medical loans can be used for many health-related expenses, including:

• Health insurance deductibles
• Out-of-network charges (not covered by insurance)
• Out-of-pocket charges (outside of insurance limits)
• Elective procedures
• Emergency treatments
• Dental procedures
• IVF and other fertility treatments
• And more

You can take out a new medical loan for future expenses or use one to consolidate outstanding medical bills or debt. Consolidating debt combines multiple balances into one, resulting in a single monthly payment. Generally, the goal is to do this at a lower interest rate than you're already paying or to achieve a smaller monthly payment.

How do medical loans work?

When you take out a personal loan to pay for medical expenses, you receive a lump sum of money that you pay back in fixed monthly installments with interest. You can put the funds toward medical bills as you see fit. This is how home equity loans typically work as well. If you take out a line of credit instead, you would have a credit line to draw from as needed, and would only pay interest on the amount you use.

An unsecured personal loan does not require collateral, is often available within days of application, and generally comes with a fixed interest rate and annual percentage rate (APR). Home equity loans also tend to have fixed rates, but use your home as collateral and can take weeks to close. HELOCs are also secured by your home, takes weeks to close, and tend to have variable rates.

Loan terms and APR

Your APR is determined by multiple financial factors, including your income, credit score, loan amount, and repayment terms. Many lenders let you prequalify to check whether you might be eligible for a loan. Prequalification is not an official offer of credit, and it will not impact your credit score. Note that when you formally apply for a loan, the lender will likely conduct a hard credit pull which could temporarily ding your score.

Repayment terms for medical loans typically range from one to seven years, and loan amounts can be as high as $50,000 or over $100,000, depending on the lender and what you can qualify for, or lower than $1,000.

Pros and cons of medical financing

Pros

• Predictable payments: With fixed monthly payments, you are able to plan your budget around your medical loan.
• Potentially lower rates: Medical loans have lower interest rates than credit cards, on average, especially if you have good or better credit (a FICO score of 670 or higher).
• Flexible spending: You are able to use a personal loan for a variety of expenses, including medical procedures and debts.
• Fast funding: Some personal loans are funded within just a few business days.
• Provides wider access to medical care: If you need healthcare that isn't covered by your insurance, or you don't have insurance, a medical loan can provide a path forward.

Cons

• Higher interest rates and borrowing costs: Medical loans could cost you more than other forms of medical financing like if you qualify for income-based hardship payment plans.
• Funding limits: If you are funding a large procedure that exceeds the amount you can borrow with a personal loan, you may need alternative funding.
• Strict credit requirements: If you have a fair credit (a FICO score between 580 and 669) or bad credit (a FICO score below 580, you may not be able to qualify for a personal loan, or you may qualify for one with a high APR.
• Credit impact: When medical balances remain with healthcare providers that charge them, they are generally not reported to the three major credit bureaus (Experian, TransUnion, and Equifax). This means that these bills won't affect your credit, while personal loans invariably will. However, if you owe more than $500 to a provider, and they turn it over to a collections agency, it could make its way onto your credit report.

How to get a loan for medical expenses

• Figure out how much you want to borrow: For future procedures or treatments, ask your healthcare provider for an estimate of your costs - with insurance, if you have it - before borrowing any money to determine how much you might need. You may be able to negotiate costs down, qualify for financial assistance, or set up a payment plan with the provider instead of, or in addition to, taking out a loan.
• Review your credit: For the best medical loan rates, you'll need a strong credit history with little to no negative marks, as well as a good credit score. That said, lenders set their own credit score requirements, and some accept scores in the poor-to-fair range (FICO scores of less than 580 to less than 670).
• Research lenders and loans: With so many options, try to get three to five loan estimates and then compare amounts, terms, qualification requirements, APRs, and any fees. Some lenders let you prequalify to see an estimate of rates. Prequalification will not hurt your credit as it's only a soft inquiry.
• Check reviews and ratings: You can review lenders using resources like the Better Business Bureau (BBB) and the Consumer Financial Protection Bureau's (CFPB) consumer complaint database. This allows you to see how other borrowers fared with a lender's services.
• Select a lender and apply: Once you settle on a lender, submit an official application. You may be required to include additional documentation, and a hard credit inquiry is typically conducted, which will temporarily ding your credit score.
• Receive the funds: If approved, read the fine print and sign for your loan. You'll then receive the funds in up to five business days.

Best medical loans

Upgrade: Best for fair credit

Discover: Best for no origination fees (and low rates)

OneMain Financial: Best bad credit personal loans

Universal Credit: Best debt consolidation loans for bad credit

Splash: Best quick loans for good credit

TD Bank: Best for no origination fee

Best for military: Navy Federal

Est. APR: 8.99% to 18.00% APR

Loan Amount: $250 to $50,000

Min. Credit Score: Does not disclose

Repayment terms: 36 to 60 months (for personal and debt consolidation loans)

Pros and cons

Pros

• No origination fees or prepayment penalties
• Low maximum APRs
• Same-day funding
• Small loan amounts available
• Rate discount for military members

Cons

• Must qualify for credit union membership
• Three-year minimum loan term

More details

Overview Navy Federal Credit Union is a strong choice for personal loans because it offers low APRs and a wide range of loan amounts. However, you must become a member of the credit union to qualify to take out a loan or open an account. Membership is restricted to active or retired military members or Department of Defense personnel and their families.

If you are eligible to join, this credit union is a good option for personal loans and debt consolidation, especially if you need a small loan or at least three years to make your payments. Navy Federal does not disclose specific credit requirements, but it does permit co-applicants on loans.

Methodology

​​We evaluated the best medical loan lenders based on factors such as customer experience, minimum fixed rates, maximum loan amounts, funding times, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date. We eliminated lenders requiring very good credit scores from ranking. Most lenders are financial partners.

Read our full lender rating methodology for more information.

When should you get a medical loan?

Medical loans can help you pay for the health care you need, but they should not be your first option to pay your bills or consolidate outstanding debt. This is because medical debt is treated differently from other forms of debt and may not immediately show up on your credit report.

Instead, medical bills generally only appear on your credit if they're sent to a collection agency. Your provider might send your bill to a collection agency if it's a few months overdue. Once in collections, unpaid medical bills won't be added to your credit file for one year (from the time you saw a doctor).

You might consider getting a medical loan in the following cases:

• You can't negotiate your medical bills down.
• You want or need a surgery or a procedure that your insurance won't cover or only partially covers.
• You were denied an interest-free repayment plan for medical bills.
• You've been denied charity care (financial assistance) by your medical care provider.
• You're using credit cards to repay your balances and want to consolidate your debt.
• Your medical debt is greater than $500 or has been in collections for more than one year.

If you've exhausted other options for medical financing, there are two main cases when it might make sense to pursue a personal loan.

Emergencies

If you or a family member require urgent treatment, and you don't have sufficient savings or insurance coverage, a medical loan can help you afford payment..

However, note that the No Surprises Act passed in 2022 limits the amount you can be charged for surprise out-of-network bills for emergency services. This means you can't be billed for out-of-network costs you don't expect or authorize if you have insurance, and you must receive an estimate of your costs ahead of time if you don't have insurance.

Elective and/or expensive treatments and procedures

For elective or nonessential procedures, such as cosmetic surgery or fertility treatments typically not covered by insurance, a medical loan can help spread the cost over a longer period of time.

Similarly, if you need a costly procedure not fully covered by insurance, either because the costs exceed your coverage maximums or your insurance won't approve certain services or providers, a medical loan can bridge the gap between what your insurance pays and what you owe.

How to qualify for a medical loan

To qualify for an unsecured medical loan, lenders will review your credit history and income along with the terms you are requesting.

You can review and/or boost the following for the best chance of getting a medical loan.

Improve your credit

Your credit score is one of the main factors that determines whether you're approved for a medical loan. Lenders set their own credit score requirements; some accept borrowers with bad credit scores, while others have higher acceptance thresholds. For example, Upstart accepts a credit score of 300 or above, whereas LightStream only accepts good-to-excellent credit (a FICO score of 670 or better).

Lenders also review your credit history for negative marks. These may include late payments or collections accounts. You can review your credit report for free at AnnualCreditReport.com. If you see any errors, report them to one of the bureaus to have them removed.

You can improve your credit and increase your chances of approval through the following:

• Pay existing credit bills on time and in full.
• Become an authorized user on a credit card of someone with excellent credit and a low balance.
• Reduce your use of existing credit.
• Minimize new credit inquiries and credit lines.

Keep your debt-to-income ratio (DTI) down

The medical loan amount you're approved for will depend on how much debt you already have. Lenders want to ensure you have enough income to manage your debt payments every month, so they will review your DTI. Your DTI is the percentage of your monthly gross income that goes toward repaying debt.

Calculate your DTI by adding up all your monthly debt payments, dividing them by your gross monthly income, and multiplying by 100 to get a percentage. For example, if you have a gross income of $4,000 and pay $1,500 in monthly debt, your DTI is 37.5%.

Lenders typically like to see DTIs lower than 36%. You can improve your DTI by minimizing your existing debt or finding a way to boost your income.

Compare loans

Prequalify for loans from different lenders by providing basic information about your finances and borrowing needs. Prequalification requires only a "soft" credit check and won't hurt your FICO score, and it's available from many lenders. Comparing quotes can help you decide which loans you may be approved for and at what terms. Check the following:

• Rates: Look for the lowest APRs on the quotes you received. The APR reflects your interest rate and upfront fees, so it's more accurate for estimating your overall borrowing costs.
• Funding amounts: Ensure the medical loan amount will cover your entire bill. Loan limits can range up to $100,000 or more, but your income, current debt, and credit score all limit the amount you can qualify for.
• Repayment terms available: Lenders offer repayment options that may be as short as 12 months or as long as seven years.
• Usage limitations: Make sure the lender you apply with allows funds to be used for medical expenses or debt consolidation.
• Interest discounts: Lenders may offer discounted interest if you use autopay to schedule automatic repayments if you're already a customer, or if the lender sends loan funds directly to your creditors.

Medical loan application process

1. Review your credit: Check your credit score to get an idea of which lenders would best suit your needs, andensure you've addressed any inaccuracies or old problems on your report.
2. Research options: Once you know your overall credit history, review your options. This may include asking your doctor's office for lenders they work with, looking for a personal loan online, or asking your current bank for medical borrowing options.
3. Prequalify for a loan: Before applying, prequalify with lenders without hurting your credit score. Learn the loan amounts, interest rates, and terms available. Prequalification does not guarantee approval.
4. Assemble documentation: Before you apply, put together the information you'll need to submit a full application. Many lenders will require you to provide forms of identity, income, and/or employment verification. This may include a driver's license, tax forms, or pay stubs.
5. Choose and apply: Choose the lender that best fits your needs and submit an application. When you officially apply, a hard credit inquiry is performed that temporarily lowers your credit score.
6. Approval, acceptance, and signature: If approved, you'll receive an offer. Your offer - including your APR - may differ from your prequalification quote. After reading through the documentation, sign and receive your funds. Some loans are disbursed on the same day you are approved, while others may take a few business days to process.

Alternatives to medical loans

Medical loans are not the right choice in many situations. Consider these alternatives.

Financial assistance or charity care

Nonprofit hospitals are legally required to offer some form of income-based financial assistance via an application process. These programs may provide free or discounted care. Follow the Consumer Financial Protection Bureau's directions for next steps.

Outside the hospital, some organizations also offer grants for specific medical procedures, such as in vitro fertilization (IVF).

Negotiation

In some cases, you may be able to negotiate down the amount you owe with your doctor's office or debt collector and agree on an amount you can repay out of pocket. This can benefit medical providers because it means getting paid more quickly and without the hassle of trying to collect your debt.

You can also negotiate with your insurance company before or after being billed for a medical expense and try to appeal denied claims.

Community assistance

Investigate community program assistance that may be available to you from city, state, or nonprofit organizations. For example, you may be able to find organizations that lend out medical equipment so you don't have to pay for a new device or they may offer free screenings for certain medical conditions such as cancer or HIV/AIDS.

Payment plans

Many healthcare providers offer informal payment plans you repay in installments over time. Some are interest-free, and others defer interest if you repay within the prescribed timeframe. In some states, government guidelines set maximum repayment amounts and repayment timeframes based on income.

Many providers that offer payment plans provide income-driven hardship plans for patients who can't afford their repayments. In some cases, you may have a portion of your balance forgiven.

Medical credit cards

A medical credit card may offer deferred interest if you can repay your balance within a specified promotional period. However, the interest rates for these are generally higher than those on the average credit card and personal loans. Medical credit cards do use credit checks to determine your eligibility, and they will impact your credit.

FAQ

Is it hard to get a medical loan?

How hard it is to get a medical loan depends on several factors, including your creditworthiness, a lender's requirements, and the specifics of the loan. Depending on your qualifications and the loan terms you want, you may qualify easily with many lenders or have trouble.

Where can I get a loan for medical bills?

You can get a medical loan or debt consolidation loan through credit unions, banks, and online lenders. Medical offices may also offer loans. To find the best medical loan, compare the APRs, repayment terms, monthly payments, and any fees the lender charges. Remember that a personal loan doesn't need to be called a "medical loan" if you can use it for any purpose.

What credit score do you need for a medical loan?

Each lender has minimum credit score requirements it may use to approve applicantsand deciding interest rates. Some lenders work with borrowers with bad credit, while others prefer to work only with borrowers with good credit.

Can I get a medical loan with bad credit?

If you seek out lenders catering to borrowers with bad or fair credit, you might be able to get a medical loan with poor credit. Medical loans for bad credit may come with higher interest rates or lower loan limits. Finding a cosigner with good credit to qualify for a loan with you could improve your approval chances and lower your interest rate.

What is a good interest rate on a medical loan?

A good interest rate on a medical loan depends on several factors such as your credit score, loan terms, and the repayment period. You'll generally find the best interest rates if you have excellent credit and are seeking a loan with shorter terms (12 to 24 months). The average rate on a two-year personal loan is currently 11.92%, according to the Federal Reserve. Anything below this rate would be considered good.