Should I take out a loan to pay medical bills?

Medical bills are a leading cause of financial strife in America. Nearly two-thirds of households that filed for bankruptcy between 2013 and 2016 cited medical bills as the main contributor, according to a study published in the American Journal of Public Health.

But bankruptcy isn’t the only option for managing the high costs of medical care. In some cases, personal loans may be an option for mounting medical expenses. There are also a handful of other financial strategies that can lighten the load when healthcare costs get too high.

How to use a personal loan to pay medical bills

If you do opt for a personal or medical loan, you’ll need to fill out a quick application with your chosen lender and submit to a credit check. Depending on your credit, you may need some form of collateral — a car, your house, or another asset.

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In most cases, you can expect funding in a matter of days, at which point, you can use the funds to pay off your debt. You’ll then make monthly payments toward your loan until the balance is paid off.

A quick note here: Always use a personal loan repayment calculator before applying for your loan. You’ll want to be sure you can afford both the monthly payments and the long-term costs that come with your loan.

Should you use a personal loan to pay medical expenses?

Personal loans, as well as specific types of them like medical and debt consolidation loans, can seem like an easy fix when you’re facing high medical bills. They don’t require collateral, and there are typically minimal credit requirements, too. Additionally, they usually offer funding in just a couple of days.

According to Howard Dvorkin, chairman at Debt.com, these loans can be a good option if you’re facing potential collections attempts.

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“If you have good credit but a lot of medical debt, consider a debt consolidation loan,” Dvorkin said. “It’s better than letting your bills linger in collections, it allows you to pay off your bills in a lump sum, and it helps you avoid the hassle of setting up a repayment plan.”

But these loans aren’t without drawbacks. For one, they can ding your credit score. The loan will not only drive up your balances, but it will require a hard credit inquiry, too — both of which can send your score plummeting.

Potentially worse than that, though? You’ll pay interest to take out those loans — and that means even more in total expenses over the long term. If you have a particularly large amount of debt or less-than-stellar credit, your interest costs will be even higher.

What are other options for paying medical bills?

Loans aren’t your only path forward if you’re facing sky-high medical bills. In fact, before even considering you may want to call the doctor or hospital who billed you first.

According to Kent Ivanoff, CEO and co-founder of healthcare billing platform VisitPay, most providers are willing to work out a payment plan — often ones with no interest. Many providers also offer discounts or financial assistance, especially if you’re uninsured or under a certain income level. Some are even willing to negotiate on charges.

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“Rather than taking out a loan from a third party, you’re likely much better off working with your healthcare provider directly on longer-term repayment plans,” Ivanoff said. “Most health systems in the U.S. are not-for-profit organizations. They are very likely to work with you on consumer-friendly repayment options.”

If talking with your provider doesn’t pan out, you might consider:

• A home equity loan or line of credit, if you’re a homeowner
• A 401(k) loan, if you have retirement accounts to pull from
• A personal line of credit, which lets you pull out cash as needed rather than in one lump-sum
• A low- or zero-interest credit card, provided you can pay the balance off before your promotional period ends

Some providers also offer in-house financing or have credit card partners that can help you finance your debt. Just be sure to weigh all your options first, and always get the details on interest rates, fees, and terms in writing before moving forward.

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Double-check your bills

If you’re facing high medical costs, always check your bills for accuracy. Ninety percent of medical bills contain errors — often duplicate charges, incorrect quantities, and charges for canceled tests and procedures  — according to Medliminal, a company that reviews health care bills for clients. Compare your bills with any explanations of benefits you receive from your insurance company, and consider using a medical billing advocate for help.