If you've been injured or have a chronic illness, medical bills can stack up quickly. Even if you have health insurance, chances are you're still responsible for covering part of the cost. Depending on the types of medical services and procedures you need, an emergency fund and any savings you have can quickly disappear. That's when a medical personal loan can help out.
Disadvantages of Medical Debt
When you have unpaid medical expenses hanging over your head, you are at risk of filing for bankruptcy. In fact, unpaid medical expenses are the number one reason why Americans file personal bankruptcy, even if they had health insurance. According to a study conducted by the Consumer Financial Protection Bureau, medical debt is also the main cause when people find themselves hounded by debt collectors.
You aren't exempt if you have a history of always paying your bills on time. If a medical provider sends your past due account to a collection agency, or you file bankruptcy, your credit rating will plummet. Until you rebuild your credit score, you won't find it easy to qualify for a mortgage, auto loan, or other lines of credit.
Advantages of a Medical Personal Loan
When applying for a personal loan to pay off medical expenses, you usually get a quick decision as to whether you are approved. The application process generally is simpler than it is when you apply for other types of loan, and you get the money fast upon approval.
An unsecured personal loan doesn't require collateral, and you don't need perfect credit to qualify. However, a high credit score may qualify you for a lower interest rate on the loan. Lower interest helps reduce the cost of the loan.
When weighing the benefits of a medical personal loan, keep in mind that alternatives like paying medical debt with a credit card can cost you more in the long run. The interest rate you pay may be higher than the interest on a personal loan. You also will be running up your credit card balance, which can lower your credit score.
If you take out a personal loan, you get a fixed rate and loan term. With an installment loan, you'll owe the same payment amount each month and can repay the loan in full within a specific period of time. Many personal loan lenders also charge no prepayment penalty if you pay off the loan balance early.
Before applying for a personal loan to pay off medical debt, request an itemized billing statement from each provider from whom you received inpatient or outpatient medical services. You have the right to know what you're paying for; therefore, a bill that lists only a lump sum balance just doesn't cut it.
Review the charges to make certain you haven't been billed for services, medications, or medical supplies you didn't receive. Mistakes happen with overcharges and duplicate charges common errors. Watch that you weren't billed for a group of services under one code and then billed again for each service separately.
Confirm that your insurance company has paid its portion of the bill and that the amount has been credited to the initial balance you were billed. Check, too, to see if your health insurer paid for all services covered by your policy.
Once you know you aren't paying for anything you shouldn't, look into loan options. Compare the rates, terms, and costs of several different personal loan lenders. After you receive loan quotes, ask a lender for additional information on anything about which you are uncertain. Get answers to any questions you may have before selecting a personal loan.
Whether you are considering a personal loan to pay off a single medical bill or consolidate multiple medical debts, give the loan specialists at Service Finance Co. and Employee Finance Co. a call to learn more about your financing options.