What Is a Medical Loan and How Does It Work?

How a Medical Loan Works
Application
You apply for a medical loan through a bank, credit union, online lender, or a specialized medical financing company. The application process typically includes:

Credit check

Income verification

Employment history

Approval and Loan Terms
If approved, you’ll receive a loan offer detailing:

Loan amount (usually from $1,000 to $50,000 or more)

Interest rate (fixed or variable, depending on your creditworthiness)

Repayment term (commonly 12 to 60 months)

Monthly payment amount

Disbursement
The funds are either:

Sent directly to your medical provider, or

Deposited into your bank account for you to pay the provider

Repayment
You repay the loan in fixed monthly installments over the agreed term. Missing payments can negatively impact your credit score and may incur fees.

Pros of Medical Loans
Fast approval and disbursement

Fixed monthly payments

No collateral required (unsecured loan)

Can help manage unexpected or high medical bills

Cons of Medical Loans
Interest rates can be high (especially with bad credit)

Adds to personal debt

May have fees (origination, late payment, etc.)

Alternatives to Medical Loans
Payment plans with the healthcare provider

0% APR credit cards (if paid off during the promotional period)

Health savings accounts (HSAs) or flexible spending accounts (FSAs)

Medical credit cards (e.g., CareCredit, but use caution due to deferred interest clauses)