Medical emergencies don’t ring a warning bell before they arrive. They catch you off-guard when you least expect them. Even with insurance, medical bills can turn out to be quite overwhelming. And much as you’d like to ignore them, you cannot, for the simple fact that if left unpaid, medical bills can wreak havoc on your credit and taint your rating. According to a 2014 study by the Consumer Financial Protection Bureau (CFPB), at least one unpaid medical bill appears on 1 in every 5 credit reports, negatively affecting the credit scores of at least 43 million Americans.
In addition to the medical crisis that you go through, you also have to deal with the stress of paying huge bills. What can you do? Maybe pay-off the bills with your credit card- just to get the doctor off your back? It does seem to be the easiest way out. But that’s exactly what you shouldn’t be doing, because any balance on your credit card is likely to lead you through a never-ending debt cycle with high rates of interest. It may take a lifetime to pay off these dues.
Personal Loan for Medical Bills
A more effective and affordable way to handle medical expenses is through a personal loan. A number of leading lenders offer personal loans to consumers. These are unsecured loans extended with a repayment period of 2-5 years. They can be used for any purpose, including paying for medical treatment. However, before you decide to take out a personal loan to pay off your medical bills, here are the pros and cons to consider:
- Since personal loans are unsecured loans, you need no collateral. They are also easy to obtain with less paperwork.
- Interest rates can be as low as 4.99%. This is much lower compared to the interest rates on credit cards.
- Unlike credit card debts, these loans come with a proper repayment schedule, which makes it easier to pay back your medical debt in easy monthly installments.
- Personal loans are characterized by quick approval. Most lenders approve and release funds in as little as 1 business day. This makes personal loans ideal for medical emergencies.
- Loan amounts range from $1000 to $50,000.
- They have no impact on your credit score, unlike unpaid medical bills or credit card debts.
- No loan comes without interest. Even if you take a personal loan to meet your medical expenses, you will still have to pay an interest on the amount you borrow.
- If your medical bill is very high, a personal loan may not be sufficient to pay for it, because unsecured personal loans cater to smaller financial needs within the limit of $50,000.
- You need a decent credit score to be able to avail a personal loan. Although some lenders may give you a loan even with a poor credit score, your score will affect the interest rate that will be charged on your loan.