Medical bills are the number one reason why people file for bankruptcy in the United States. When numerous medical bills begin flooding into your mailbox, it’s difficult not to feel overwhelmed, especially for the uninsured. But those who have insurance can feel the pinch if the medical problem is severe.
The influx of medical bills on an individual or a family can cause havoc to your personal finances. Each bill can have its own amount, making the total amount you owe seem impossible to pay.
Thankfully, taking out a personal loan to ward off medical bills could be the answer you’re looking for.
Let’s explore some of the ways personal loans could help you end those medical bills once and for all.
What Is a Personal Loan?
A personal loan is a loan that’s used to cover larger expenses. Personal loans can be used to fund home repairs, debt consolidation, vacations, and the like. The interest rate is typically more friendly, yet most of them are unsecured. Unsecured means there’s no collateral associated with them.
Personal loans also have a limit, meaning once the money is spent, there are no increases. A typical timeframe of the life of a loan is two to five years, depending on the amount borrowed.
The amount borrowed from a personal loan can range from $1,000 and higher, even reaching $100,000 in some cases.
7 Ways Personal Loans Can Help You with Medical Debt
Hospitals sometimes offer payment assistance with medical bills, however, depending on your situation, they may be less than helpful, especially if you owe a significant amount.
Personal loans save you from the hassle of juggling several medical bills at once. Here are eight ways how.
1. One Monthly Payment
Having to pay many bills at once can get tricky, and sometimes it’s hard to remember which ones have been paid or not. Consolidate all your medical bills into one is the biggest advantage. You no longer need to worry about making numerous payments as one payment toward the loan is all you need to do.
2. Low-Interest Rate
For some people, a credit card could be an option to store all your medical debt upon. But credit cards come at a much higher rate than personal loans.
The interest rate of a personal loan depends on your credit score, but the range can start in the single digits and move upwards.
In some cases, a personal loan can even improve your credit score.
3. Applying Online Is Easy
Once you add up the amount you owe toward your medical bills, you can begin applying online. You’ll need to know the exact amount you need and your credit score. Consider shopping around for the best rate before you make a decision.
4. Predictable Payments
Because you have one monthly payment and you know the amount, you can work within your budget to accommodate the payment.
5. Quickly Pay It Off
The life of a personal loan could be just a couple years or less. However, if the terms of the loan allow, you could pay it back quickly, saving yourself some interest.
6. Unsecured Loan
Most personal loans are unsecured, meaning there’s no collateral associated with them. Sadly, if your medical bills are mounting, in some rare cases, people lose their homes over lack of being able to afford medical bills.
7. Peace of Mind
When your medical bills are paid for, you can stress less. The phone calls stop, the mailbox is empty, and you can focus on your health and healing. With a personal loan, you have a payoff time, and this can be comforting.
How Do I Know If I Qualify for a Personal Loan?
Even though getting a personal loan is fairly easy for those with good credit, there are some qualifications.
- Must be between the ages of 18-65 to qualify
- Have an income higher than $500
- Credit score within the mid 600s or above, though you could secure different loans with lower rates depending on the lender
- A low debt-to-income ratio
- A valid bank account and account number
While these qualifications are a generality, they can vary according to the lender.
Tips for Dealing with Medical Bills First
Before you begin applying for a personal loan, here are some tips to see if your costs can be lowered.
1. Don’t ignore them. Ignoring medical bills does more harm than good. Eventually, they could go to collections and cause you more difficulty in the long run.
2. Review your medical bills for errors. Insurance companies make mistakes, and you could own substantially less than the bill states.
3. Try negotiating with the hospital. Sometimes the hospitals will deduct an amount based on your income or have financial aid plans available to assist with those steeper bills.
4. Set up a payment plan. Because they want to get paid, hospitals could be willing to set up a payment plan so you can pay them over time.
5. Be encouraged that medical bills usually have little or no effect on your credit. The only time when your score may be impacted is if the bills go to collections and are 180 days past due.
How to Find a Lender
If you’re interested in taking out a personal loan to cover your medical bills, do some research on the lenders. Look around for the best interest rate before you commit to the loan. Have the loan amount you need and your information available when applying.
With a low credit score, it could be a challenge to get a personal loan, but there are options. Some credit unions specialize in lending to those with a low credit score, but your rate could be higher. Also, consider having a trusted friend or family member co-sign with you.
Ready to Take Out a Personal Loan?
Tackling your medical bills with a personal loan is a great way to eliminate them, especially when you’re all out of other options. Personal loans offer you peace of mind and one payment instead of many, which works well within a budget.
Interested in personal loans for your medical bills or other financial needs? At Bonsai Finance, we aim to assist you with any financial burden with a non-judgmental and professional attitude. Visit us today to find out more.