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Can You Use a Personal Loan to Cover Medical Expenses?
Unexpected medical expenses can be a heavy financial burden and a source of additional stress. Whether they come from an unforeseen accident or illness or a medical procedure you knew was coming, medical bills can quickly add up to thousands of dollars even with insurance coverage.
While health insurance might help pay your medical bills, it generally doesn't cover everything. That means you must handle a significant portion of the expenses on your own. Then a medical emergency becomes a financial emergency—exhausting your peace of mind and your bank accounts.
When we find ourselves overwhelmed with medical care costs to cover, a personal loan for medical expenses can be a solution to cover costs and ease the strain on your personal finances.
Using a personal loan for medical expenses
Personal loans can be versatile tools and using them as a medical loan to cover medical bills is common. In fact, personal loans can be used for a variety of purposes, including:
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Consolidating credit card debt to simplify your monthly bills
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Financing home renovations to upgrade your living space without using your home as collateral
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Buying or repairing a vehicle
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Dream vacations, either to cover the trip or have a little extra spending money
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Weddings, so you can spread out the cost of your big day over months or even years
With this wide range of possibilities, personal loans can easily provide the financial assistance necessary to cover medical bills, medical procedures or other urgent needs.
Personal loans are generally unsecured personal loans, which means they don't require collateral like a car or a home. This can make them an accessible and flexible financing option for individuals in need.
Secured and unsecured personal loans
To understand personal loans better, it's important to distinguish between secured and unsecured loans.
A secured loan is backed by collateral, such as a house or a car, which the lender can claim if the borrower fails to repay the loan or meet the requirements of the loan terms. Alternatively, unsecured personal loans do not require collateral.
When it comes to paying medical expenses, TD Bank offers unsecured personal loans. They eliminate the risk of losing valuable assets and provide the necessary funds quickly and efficiently. With an unsecured personal loan, borrowers can focus on their medical needs without the added worry of securing their medical debt against their property.
How to apply for a personal loan for medical expenses
Applying for a personal loan for medical expenses is a straightforward process that can be completed online, by phone or in person, depending on the lender's offerings. Let's take a look at the steps involved, using TD Bank's personal loan process as an example.
Gather your information
Before starting the application, gather the necessary information, such as your identification documents, proof of income, employment details and current financial obligations.
Research your options
Many lenders allow you to pre-qualify for a loan, which involves providing some basic information to check what terms you might expect without affecting your credit score. This can usually be done online or over the phone and provides valuable insights into the potential loan options available to you.
You can get results instantly in many cases, and those results will provide a snapshot of the terms, including the loan amounts, the interest rate and the repayment terms.
Select an option and apply
Once you've reviewed your pre-qualification results and decided on the loan option that suits your needs, proceed with the full application.
At this stage, TD Bank (as well as other major lenders) will perform a hard credit pull, which can have a temporary impact on your credit score. You'll need to verify your personal and financial information and, once submitted, you can expect to receive a decision on your loan application by email
If TD Bank approves your loan, the loan funds can reach your bank account in as little as one business day1.
Factors to consider
When selecting a loan option to pay for medical expenses, there are several factors to consider to ensure you're making the best choice for your situation. Some key points to consider before applying include your annual income, minimum credit score requirements, the dollar amount you can comfortably afford for monthly payments or a payment plan and a loan amount that will allow you to cover the medical treatments you’re about to incur.
Let's explore some of these considerations and other issues to look at when comparing medical loans.
Loan amount
Determine how much money you may need to adequately cover your medical costs. TD Bank offers personal loans ranging from $2,000 to $50,000, potentially providing some flexibility to meet varying financial needs.
Interest rates
The interest rate determines the cost of borrowing and affects your monthly payments. You might consider comparing interest rates from multiple lenders to secure the best possible rate based on your creditworthiness and financial situation.
It’s important to note that the interest rates you are offered can fluctuate quite a bit depending on whether you have good credit or bad credit. If your credit history shows some past troubles, it might be a good idea to take steps to repair your credit before you apply for any personal medical loans.
Loan terms
The loan term refers to the duration over which you'll repay the loan. Longer terms may result in lower monthly payments but can lead to higher overall interest charges. Consider your financial capabilities and select a term that allows you to comfortably manage your monthly payments.
TD Bank offers a period of 36 to 60 months for repayment. The loan terms and repayment terms may fluctuate depending on your credit history.
Fees and penalties
Be aware of any origination fees or penalties associated with the loan.
TD Bank does not charge an origination fee or any application fees for its personal loans, providing more affordable options for borrowers. It also does not charge prepayment penalties, so if you're able to pay off your loan ahead of schedule, you can do that at any time without penalty.
Online services
Online lenders offer convenient application processes and the ability to manage your loan online. TD Bank provides an easy-to-use online platform where you can complete the application, monitor your loan status and make payments.
When faced with the daunting task of paying for medical expenses, a medical personal loan can be a viable and practical solution. Their flexibility, accessibility and unsecured nature may make them an appealing option for those seeking financial assistance.