Unsecured Medical Loans -
Comparing Brokers, Direct Lenders & Credit Cards

If used correctly, unsecured medical loans are a great option for financing part or all of your medical treatment. If used incorrectly, you could end up paying as much as 30% more per year than the original cost of the surgery.

This page will help you navigate the land mines and choose the option that's right for you...

• Overview
• The process of obtaining medical loans
• Potential hazards
• Brokers vs. Lenders
• Brokers to choose from
• Lenders to choose from
• Regular credit cards

Overview of Unsecured Medical Loans

These types of medical loans are called "unsecured" not because they are unsafe for you but because you do not put up collateral to "secure" (back up) the loan in case of default.

After approving your application, your lender of choice will pay your doctor's office directly and up-front for the entire amount of the surgery and after care. Your approval or denial and loan terms (length of loan, monthly payments, interest rate, minimum and maximum loan amount, etc.) will vary by lender and will be based on your credit score, employment status and income.

Because lenders charge an interest rate on unsecured medical loans, find out first whether your doctor’s practice will finance you directly. Getting a payment plan set up directly through your doctor is better for a few reasons:

• Doctors typically charge little or no interest and often do not charge any additional fees
• They are likely to be much more flexible than banks and credit card companies
• Being late on a payment probably won't effect your credit score

However, doctors aren't in the business of lending money, so don't be surprised if they won't agree to offer direct financing.

Process of Obtaining Unsecured Medical Loans

First, note that your credit report and score will affect both the types of unsecured medical loans available to you and the rate you are charged. Learning what your credit score is before applying for a loan and which factors (if any) are bringing down your score can help you figure out:

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• How likely you are to get approved (a score of 620 is typically the lowest score allowed in order to get approved for a regular loan)
• How competitive your rate is likely to be (the higher your credit, the lower your rate)
• Whether any items on your credit report are inaccurate or could be removed to improve your score (i.e. contact an old lender to dispute late payments or request their removal of a late payment - some lenders will allow a "goodwill" removal of a late payment on a one-time basis)

Click here to go to freecreditscore.com (aff) to obtain your updated credit score and report and to determine which factors are affecting your score.

Here’s how unsecured medical loans should work…

1. After negotiating the packaged deal with your surgeon (cost for treatment and follow-up care), they tell you that they cannot finance you directly but they either already work with or are willing to work with companies who do (if they don’t bring it up, ask). When you receive financing through a third party, the doctor usually gets paid in full before surgery, although some arrangements pay the surgeon back over time.
2. Shop around for the best deal (we’ll help you figure this out below), and be sure to ask for enough credit to cover your entire treatment and aftercare.
3. After you pick a broker/lender and a plan there are a few ways to apply for the loan, including completing the form at your doctor’s office or applying online (more on this below). You’ll typically receive a response from the lender within 30 minutes when applying online.
4. Rates will be based on the term (length) of the loan and your credit score - the shorter the loan term and the better your credit, the lower your interest rate will be.
5. You will continue making monthly payments until the loan is paid off.

Potential hazards of Unsecured Medical Loans

Before we review your unsecured medical loan options you should understand the potential hazards. If you have any questions, discuss them directly with the broker, lender or your doctor’s office…

• Unsecured Loans Impact Your Credit – Late payments or a loan default could affect the interest rates you pay on future loans, insurance premiums or even your ability to get a job or rent a home. See the FTC’s web site for more info about credit. 
• Weight Loss Center Conflict of Interest – If your doctor already partners with a lender or broker, don’t automatically assume it’s the best. You may get a better deal elsewhere, and your surgeon’s office only has to fill out a form or two to become affiliated with a different lender.
  
  Also ask your surgeon's office whether any part of the financing arrangement they offer is controlled by them and up for negotiation. Some popular lenders leave some of the terms (i.e. additional fees) up to your doctor, so there may be room for negotiation.
  
  If your doctor is absolutely not willing to work with any other lenders, you should be suspicious – they may have a financial incentive to work with their chosen lender. The lender you choose shouldn't matter to them. After all, they usually get paid up front regardless of which lender you use.
  
  If your surgeon’s deal is better than anything else you find, great! If not, they should understand your decision when you tell them what you were able to find elsewhere.

• Introductory & Interest-Free Offers and the Fine Print – You may be able to get a 0% interest rate to start out, but understand that it won’t last forever. Find out when the low interest rate expires (“introductory term”) and what the new interest rate will be when it does. Also ask if there is any way that the rate could go up before the end of the introductory term.
  
  For example, some lenders will increase your rate to as high as 30% if you are late on a payment. The interest rates will also increase after the introductory term is over.
  
  In addition, some introductory offers will exclude certain services from your doctor, leaving you with a higher rate for those services. Could it be better for you to pass on the “No Interest Plan” and jump right into their normal "fixed rate" plan?
  
• Beware of the "minimum payment" offer on your monthly bills. If you only pay the minimum payment instead of the total monthly amount due, you will owe more when the introductory term expires (if there is one) and you could end up paying much more over the long run.
  
  Before moving forward, be sure you can afford to make the full "amount due" payment each month.

• If you get denied - find out if the broker or lender will accept co-signers. Some allow either friends and family to attach their name to a loan while others only allow family members.

Ready to review your options for unsecured medical loans?

We’re almost there. First, understand that there are two ways to go about this...

Brokers vs. Lenders for Unsecured Medical Loans

The two primary avenues available when applying for unsecured medical loans (credit cards are usually more expensive):

1. Directly through the lenders
2. Through a broker who shops multiple lenders for you and presents you with the best deal they can find

Here are the pros and cons of each…

As you can see, there are compelling reasons for each. You’re only going to know that you’re getting the best deal if you work with a broker AND take the time to work through individual lenders.

And don't be afraid to negotiate. Sharing the deal you secured through a different lender may lead to a lower interest rate.

If you don’t want to take the time to contact multiple lenders or learn all of the financial ins and outs, use a broker. 

When choosing between multiple options (brokers should automatically give you the best deal they can find), run through this quick budgeting exercise to figure out which would be best for you:

1. How much can you afford to pay per month? The more you can afford per month, the less you’ll pay over the long term. But whatever you do, don’t extend yourself so far that you won’t be able to make the monthly payments.
2. Ask your broker or lender to map out in writing what your monthly payments will be under each option and what your total costs will be over the term of your loan. Assuming the interest rates are the same, the higher the monthly payment, the lower your total costs should be.
3. As long as you’re sure you can afford the monthly payment, the option that costs the least over the long run (NOT the option with the lowest monthly payment) should be the one you choose.

Now that you know the facts and pitfalls, you're ready to apply for a loan via your broker or lender of choice...

Unsecured Medical Loans - Broker Comparison

Following is a comparison of myMedicalLoan.com (aff) and Medical Financing Solutions (aff). Each brings a unique approach, and both are able to shop multiple lenders to obtain unsecured medical loans on your behalf.

Direct Lender Comparison

Following are the lenders that offer unsecured medical loans directly along with the contract details of each...

Unsecured Medical Loans Using Regular Credit Cards

Don’t forget to look in your wallet!

After all is said and done and you have your broker or lender offer in hand, pull out your wallet and call your current credit card companies. What is the interest rate they are currently offering?  Are they willing to reduce it?

Explain to them what you are trying to do and how much you need to borrow. If you have good credit, they may bring the rate down as low as 12%.

If one of your credit cards has a better rate than your broker or individual lenders have provided, using it to pay your doctor may be the way to go.

However, keep your credit card limit in mind. The money you use to pay for your treatment will reduce the amount of credit you have available on that card for other expenses.