Know The Basics And Your Requirement Before Taking On A Medical Loan : Medical debt seems to be a major issue not only in the US but all over the world. This is primarily due to the rising costs of medical care. In addition to that there are several restrictions imposed on health care insurance coverage.
All these mean that people are left with no other alternative but to borrow money so that they can pay for the medical bills. However, taking out a loan may not always be possible from a traditional bank or a financial institution and even any reliable and reputable online money lending sources such as Libertylending.com. It all depends on your eligibility, the specific lending procedures and certain situations. In such situations you will need to consider other lines of credit even if that costs you more.
According to a survey conducted by the Kaiser Family Foundation it is found that:
- One in five or 20% working Americans are reported to have problems in paying off their debts as well as their medical bills.
- They look for other affordable options so that they can save money to pay for the health care insurance coverage with intent to avoid falling into medical debt.
- Lastly, given that the procedures allow they consider taking out a medical loan.
However, the study also showed that most of the people do not know the basics of the medical loans, how to obtain one and how exactly these work.
The advantages
There are several advantages when you take out a medical loan, of course if you qualify. The most significant benefit is that you will not have to worry about your health and health care anymore. These are usually a special type of personal loans but are specifically designed to meet several different medical purposes such as:
- To finance the medical treatment procedures
- For medical debt reconciliations
- For any optional surgical procedures
- For out of network charges
- For any other cost related with any type of medical treatment that are typically not covered by your health insurance policy.
The surprising fact about medical loans is that these are the primary reason why most of the people in the US file for bankruptcy, as per the report of Patient Advocacy Foundation.
However, in spite of this alarming fact, the advantages of taking out a medical loan cannot be overlooked. It will help you to:
- Manage the cost of your health care
- You will have an affordable repayment schedule
- It will help you to avoid the worries and stress of medical debts and collections
- You will not have to make special and separate arrangements to pay off the medical bills in one shot
- Since these medical loans are unsecured, you will not necessarily need to put anything as collateral security for getting it
- This medical debt will not affect your credit report or your credit utilization ratio
- In a few specific circumstances a medical loan will provide you with better finance options and
- You will get these loans at a better rate in comparison to any financing through the specific medical service provider.
Moreover, you will get the required funds for your medical treatment procedures much faster in comparison to the wait time taken by the insurance companies to determine whether a few specific things are covered in the insurance policy or not.
Another most significant benefit of taking out a medical loan is that you can use the money received from the medical loan to cover any other expenses related to your medical treatment such as the additional living expenses while you were recovering from the ailment.
Situations to take on a medical loan
Taking out a medical loan can be especially helpful in a few specific situations specifically when your insurance does not cover everything regarding the specific treatment. Some of the most common circumstances and medical procedures where a medical loan will be of much help for you include:
- Cosmetic surgery
- Orthodontics
- Fertility treatments
- Weight loss related surgery such as bariatric processes and
- Consolidating medical debt.
However, there are few people who may also consider taking out a medical loan when their insurance companies consider that a specific treatment process is not “medically necessary” and does not cover their insurance policy. This prevents them from having to bear the entire or a portion of the cost of treatment or tests themselves.
Medical loans are usually offered by different lenders, traditional or private. However, the application process is very much similar for both types of lenders as it is for applying any type of credit.
Need to compare medical loans
Nevertheless, the lenders may vary in their lending policy when it comes to the eligibility requirements to avail such loans. A few may be quite flexible in their credit score requirements while other may on and want a better credit history than the other lenders.
If you look at the downside of a medical loan it is that it may come with a high rate of interest. It is for this reason you are suggested that before you apply for a medical loan, make sure that you look into the payment plans, flexibility and medical credit cards.
When you compare medical loans make sure that you check on the following:
- The Annual Percentage Rate or APR, as this will help you to save money just as a savings account would help you to save money faster. The rate of interest of any loan will determine how much money you will pay every month and how much the loan will cost you. It will affect your ability to repay the loan within the loan term.
- Also check the origination cast and interest-free periods if any. For some specific loans this grace period can be up to 18 months before the loan starts to accumulate interest. Origination costs may also vary. These are one time charges you pay the lender to process your loan and the value depends on the amount of the loan calculated as percentage of it.
Also check the loan tenure and whether the interest is charged at a fixed or at a variable rate to ensure everything works according to your budget.
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