Financing

Secured Medical Loans – Pros & Cons

Secured medical loans:

  • Can be used to finance all or part of your procedure, or whatever insurance does not cover
  • Usually require a minimum credit score of 620
  • Are loans from a bank or credit union that you back with some form of collateral. If you don’t pay the loan back, the lender can take ownership of the collateral you use
  • Most commonly use your home as collateral, but lenders may allow other assets to be used
  • Can be obtained through brokers or direct lenders (banks)

Read and click the sections below for everything you need to know getting a secured weight loss surgery loan.

TABLE OF CONTENTS

Click on any of the topics below to jump directly to that section

  1. Secured Vs. Unsecured Loans
  2. Types of Collateral
  3. 3 Loan Avenues
  4. Broker Options
  5. Lender Options
  6. Find a Top Surgeon
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01.

Benefits of Secured Vs. Unsecured Loans

SECTION SUMMARY:

  • Secured loans have a lower interest rate
  • Secured loans offer longer terms (up to 10+ years), so lower monthly payments
  • Secured loans offer larger loan amounts
  • Secured loans are easier to obtain (assuming you have proper collateral)

First, note that your credit report and score will affect both the types of 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:

  • 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 to obtain your updated credit score and report and to determine which factors are affecting your score.

The glaring difference between secured and unsecured medical loans is the use of collateral, which is required for secured loans. With unsecured loans, you provide no collateral.

Before moving forward with any kind of loan, understand all of your financing options and the fine print.

Whether or not your loan is secured, the lender will come after your assets if you default on your loan.

The collateral makes loans less risky for the lender. If you default, the lender will have a much easier time getting some or all of its money back since it can take ownership of your property to offset their losses.

There are also several other important differences resulting from the risk offset by your collateral (we’ll get into the various forms of collateral in the next section):

  • Secured loans generally have a lower interest rate than unsecured loans (all else being equal). However, your interest rate will still be based on your credit score, income and loan terms.
  • Secured loans typically allow much longer terms up to 10 years or more, while unsecured loans usually have terms of 5 years or less. Choosing a longer-term secured loan will reduce your monthly payment, but it will also erode the cost-saving benefits of the lower secured loan interest rate.
  • Secured loans may allow you to obtain larger loan amounts depending on the value of your collateral (most commonly your home). Unsecured loans typically cap out around $25,000, while secured loans can be obtained for much larger amounts.
  • Secured loans may be easier to obtain if you have a poor credit score.

However, secured loans have a two main potential downsides…

  • Your home or other valuable property could be taken from you if you can’t pay off your loan.
  • There’s lots of paperwork since secured loans usually involve refinancing your home.
  • They can take longer to arrange and fund given the complexity of the contracts. Unsecured loans typically take about 1 week to fund while secured loans can take as long as 30 days or more.

So which is right for you?

Generally speaking, patients seeking medical loans of a smaller amount (under $15,000) go for the simplicity of unsecured medical loans.

If you own a home, have equity and are looking for a loan greater than $15,000 you may want to consider a secured loan…

02.

6 Types of Collateral

SECTION SUMMARY:

  • Home (most common)
  • Land
  • Car, motorcycle, or other automobile
  • Boat
  • Certificate of Deposit (CD)
  • Cash investments

By far the most commonly accepted form of collateral for secured medical loans is your home (also called a mortgage loan).

If you own your home and have equity built up, a home equity line of credit (HELOC) can sometimes be taken out for up to 90% of your home’s value. It is usually only possible if you have at least 10 to 20% equity built up.

While many banks won’t accept other forms of collateral for unsecured medical loans, it may be worth asking. Other forms could include:

  • Land
  • Car, motorcycle or other automobile
  • Boat
  • Certificates of Deposit (CD’s)
  • Cash investments

If you don’t have home equity or do not own any of the other assets above, see our Unsecured Medical Loans page for more information about that kind of loan.

If you do own one of these assets, click the section below to learn how to apply for a secured weight loss surgery loan.

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03.

Comparing Brokers & Lenders

SECTION SUMMARY:

  • Brokers are “middle men” that can help you find a lender or get a better deal
  • Lenders are the institutions that lend you the money
  • There are pros and cons to each
  • Apply for a loan using both avenues, then choose the best deal

As with unsecured medical loans, there are two primary ways that you can apply for a secured medical loan:

  1. Directly through a lender/bank
  2. Through a broker who shops multiple lenders/banks on your behalf

Tap here to see a chart of the advantages and disadvantages of each

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  Unsecured Medical Loans Direct through Lenders Unsecured Medical Loans through Brokers
Additional broker fees No Yes ($100 to $3,000+ over term of contract)
Who must spend time to find best deal? You Broker
Help finding options with low credit No additional help Will help find a deal
Ulterior motives? No Possilbe (may be receiving incentives to recommend one lender over another – ask them to share all of the deals they find in writing rather than only presenting the “best” option)
Do you already have access to some/all of the funds? No No

So which is better, using a broker or going direct to a lender?

It depends.

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 elsewhere may lead to more favorable loan terms. At a minimum, contact your local bank to see what kind of deals they can offer.

If you don’t want to take the time to contact multiple lenders or if you’re uncomfortable with all of the financial ins and outs of comparing offers, use a broker. 

04.

Broker Options

SECTION SUMMARY:

  • myMedicalLoan.com
  • Medical Financing Solutions
  • United Medical Credit

myMedicalLoan.com and Medical Financing Solutions are two of the most popular medical loan brokers, and each offers competitive financing for both secured and unsecured medical loans.

Tap here for a chart comparison of available Broker Options

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Company myMedical­Loan.com Medical Financing Solutions United Medical Credit
Minimum Credit Score None – If patient does not meet their lender partners’ minimum credit requirements, patient can be enrolled in myMedicalLoan’s proprietary No Patient Left Behind program.* 620 None
Co-signer allowed? Yes Yes Yes
Available Credit $1,500 to $25,000 2 Not disclosed
Broker Fee Between $300 and $1,200 – depends on loan amount and credit score. $199 Only disclosed after submitting application
Broker Fee Payment Method Fees are built into the interest rate charged (wrapped into monthly payments).

Remember: brokers’ negotiated savings could offset their fees, so don’t make your decision solely on this factor.
Fees are built into the interest rate charged (wrapped into monthly payments).

Remember: brokers’ negotiated savings could offset their fees, so don’t make your decision solely on this factor.
Fees are built into the interest rate charged (wrapped into monthly payments).

Remember: brokers’ negotiated savings could offset their fees, so don’t make your decision solely on this factor.
Lowest Interest Rate Available 9.90% 9.90% Not disclosed
Response to: “Why should a patient choose you over another option?” “Because no patient is left behind. We’re in the business to find patients a loan no matter what.

A normal lender is just a single source company and patients must fit their criteria. With us, we’ll run your credit once and shop 10 lenders. If we can’t find a loan, patients are enrolled in our ‘No Patient Left Behind’ program (assuming your surgeon agrees to the terms*).”
“We charge lower fees than our competition and work with two competitive banks – a local Kansas City Bank and a national bank.” “We offer financing options to individuals with good, sub-par and no credit… apply with a co-signer to strengthen your application. No matter what kind of treatment you need or what kind of financial situation you’re in, we want to help you finance your healthcare procedures.”
Links to applications myMedicalLoan application Medical Financing Solutions application United Medical Credit Application
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05.

Lender Options

SECTION SUMMARY:

  • There are 5 primary lender companies

Following are the lenders that offer unsecured medical loans:

  • CareCredit
  • Lending Tree
  • Prosper Lending
  • Reliance Medical Finance
  • Credit Medical Corp. (Canada Only)

Each lender will have a unique contract with varying conditions. Tap here for a chart comparison of available Lender Options

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Company CareCredit Lending Tree Prosper Lending Reliance Medical Finance Credit Medical Corp. (Canada)
Plan Names 2 Options: (1) No Interest (2) Low Fixed Interest 1 Option: Low Interest Rate 1 Option: Low Interest Rate (1) Interest Free (2) Extended Plans Minimum credit line of $1,000; Plans are specific to each applicant
Terms (1) 3, 6, 12 or 18 months (2) 24, 36, 48 or 60 months Multiple 3 or 5 years (1) 3, 6 or 12 months (2) 12 to 60 months Depends
Interest Rate (1) 0%(2) 13.9% Depends Depends (1) 0% (2) starting at 6.9% (upper limit not available online) Depends
Fees & Penalties May be assessed if: (a) balance is not paid in full by end of term, (b) any minimum monthly payments are missed or (c) your account balance exceeds your credit limit. Not available online Not available online Not available online Not available online
Require surgeon to participate in their network (if your surgeon does not already belong, you can refer them through each company’s web site. See application links below) Yes No No, but additional offers may be available through surgeon Yes Yes
Pre-payment penalties (if you pay off the balance early) No Depends No No No
Links to fine print CareCredit fine print Lending Tree fine print Prosper fine print not available online not available online
Links to applications CareCredit fine print Lending Tree fine print Prosper fine print Reliance Medical Finance application Credit Medical Corp. application (Canada)
06.

Find a Top Weight Loss Surgeon

SECTION SUMMARY:

  • You can ask for a free insurance check /seminar /webinar /cost quote
  • You can schedule a phone or in-person consultation
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* Disclaimers: Content: The information contained in this website is provided for general information purposes and your specific results may vary depending on a variety of circumstances. It is not intended as nor should be relied upon as medical advice. Rather, it is designed to support, not replace, the relationship that exists between a patient/site visitor and his/her existing physician(s). Before you use any of the information provided in the site, you should seek the advice of a qualified medical, dietary, fitness or other appropriate professional. Advertising: Bariatric Surgery Source, LLC has entered into referral and advertising arrangements with certain medical practices, original equipment manufacturers, and financial companies under which we receive compensation (in the form of flat fees per qualifying action) when you click on links to our partners and/or submit information. Read More