How to Decide if You Need an Interest-Free Loan for Medical Bills

Interest-Free Medical Loans: Are They Your Best Option? If you’re looking for a loan to cover the expense of an urgent medical procedure and you see a creditor offering “financing at zero interest for a year,” you’re likely to want to learn more. On the surface, interest-free loans may seem like an excellent deal. After all, they can give you an opportunity to receive treatment quickly, and repay the loan at your convenience without paying any interest on the principal. But are interest-free loans for medical bills really a good idea? Or is there more to zero-interest loans than meets the eye? In this article, we explain what interest-free medical loans are and highlight some of the common pros and cons so you can decide if they’re the best option for you. How Interest-free Medical Loans Work How interest-free medical loans work is simple. The creditor assumes all the risk by providing applicants with upfront access to the funds they need to pay for their medical treatment. This arrangement works well for both the hospital and the patient, because the patient receives the treatment they need and provides care without worrying about debt collection. The patient also gets to divide a large bill into smaller monthly payments, making the cost of medical treatment more affordable. Interest-free medical loans can become complicated if you don’t pay back the loan within the allotted time frame. The loan provider typically offers a promotional period during which the loan must be repaid in full; this could be 6, 12, 18, or 24 months (depending on pre-agreed terms). If you complete repayment within that time frame, you only pay back the principal. However, if full payment is not completed before the promotional period elapses, you’ll have to pay the principal plus interest accrued in retrospect. For example, let’s say you take out a loan of $1,200 (at a 26.99% annual percentage rate, or APR) with a six-month promotional period to cover the procedure’s cost. From the time you accepted the loan, interest (at 26.99%) is being accumulated on the principal. If you pay off the $1,200 within the first six months, you’ll be in the clear and won’t be on the hook for the accrued interest. If, however, by the seventh month, you fail to pay off the entire $1,200, your balance becomes the remainder of that $1,200 (whatever you haven’t paid off) in addition to that interest rate that has been compounding the entire time. Until the loan is fully repaid (the remaining $1,200 plus the accumulated interest), an interest of 26.99% will be charged annually. Let’s explore this further by looking at the pros and cons of interest-free loans. The Pros of Interest-free Loans Some benefits to interest-free loans for medical bills include: Fast cash—If you’re in the middle of a medical crisis and need treatment quickly, but lack the funds, securing an interest-free loan can help. You can get the help you need and worry about paying for it later. Variety of loan options—You have a lot of options, making it easy to find the loan terms that work best for you and the specifics of your situation. Flexibility—Your medical bills may extend beyond what the hospital charges you. You may need to cover related expenses, such as gas, hotels, food, and anything else that happened as a result of your injury or illness. An interest-free medical loan can help with this as well. The Cons of Interest-free loans Here are some reasons why applying for an interest-free medical loan may not be a good idea: High APRs—Interest-free loans charge higher APRs than regular credit cards or loans. Many applicants see only the promise of zero-interest financing and fail to read the fine-print about the interest rates and are later caught by surprise. Sudden cancellations—Some medical loan providers will cancel your promotional period immediately if you are late on just one payment. Easy to overlook the fine print—Creditors will often give loan recipients an option to pay a minimum monthly payment. While that might sound straightforward, if you look closely at the terms of your loan, you may notice that if you only pay the minimum due, you won’t be able to pay off the loan in its entirety by the end of the grace period. For example, if you sign up for a loan of $1,200 with a promotional period of six months, your minimum monthly payment will be set at approximately $36 per month. If you adhere to this payment schedule, you will have a balance of $984 left unpaid after the sixth month. By the 7th month, retrospective interest from the past six months will be calculated and added to the principal. So, despite having paid $216, you’ll have an unpaid balance of $1,136. If you stick to the minimum monthly payment schedule until the balance is paid off, you end up paying $2,693, and it will take 96 months to do so. All things being equal, you should be able to pay off $1,200 within six months. But if you have an unexpected financial challenge during the loan term and you miss a payment, your lender may cancel your promotional period. And if you misunderstand your loan terms and only make minimum monthly payments, you’ll end up paying over $1,400 in interest over an eight-year period. How Interest-free Medical Loans Compare with 0% APR Introductory Period When people see a medical loan provider offering zero interest for a promotional period, they often mistake it for a similar offer credit card companies often provide. An important distinction exists, however. With credit cards, when the introductory period ends, cardholders only have to pay interest on their unpaid balance. For example, if you buy an item worth $1,500 using a new credit card with a 12-month introductory period at 0% APR, you make interest-free payments on the principal during the first 12 months. After the introductory period, interest is charged only on the balance that is left unpaid. With interest-free

How to Finance Plastic Surgery with Less-than-Perfect Credit [12 Options]

Medical practitioners performed over 15.6 million cosmetic procedures in the United States in 2020, even with the pandemic slump. Plastic surgery financing continues to be a trending topic. People want to look good and be proud of their bodies. They want to cover up scars from accidents, operations, and cancer treatments, and are willing to pay a premium for it. Americans spent more than $14.6 billion on cosmetic and plastic surgery procedures in 2021. The story is different for credit-challenged people, i.e., those with FICO scores below 550. Cosmetic and plastic surgeries are expensive, and people with less-than-perfect credit struggle to get financing to undergo the procedures they want or need. However, there is hope. When seeking how to get plastic surgery financing with bad credit, consider these 12 brilliant options. 1. Health Insurance If you have health insurance, you may not need to pay the total cost of the surgery from your pocket. As long as the procedure you seek is medically justifiable, insurance may cover most, if not all, of it. Insurance may cover a nose job to correct breathing difficulty, eyelid surgery for victims of fires or accidents, breast reduction surgery to ease severe back pain, for example. However, insurance doesn’t typically cover cosmetic procedures performed primarily to improve one’s appearance or boost self-confidence. 2. A 401(k) Loan For those contributing to an employer-sponsored retirement account, a 401(k) loan is one way to finance plastic surgery. This loan is one of the few options with manageable interest rates for credit-challenged individuals. Similar to using health insurance to cover the cost of a procedure, you may not be able to get a 401(k) loan for purely elective cosmetic procedures. If you require surgery to correct a congenital disability, a genetic anomaly, or a disfigurement caused by a disease or an accident, check your plan documents or reach out to your retirement account administrator to get details about your account’s available loans. 3. Home Equity Loan Homeowners with accumulated equity may be able to take out a second mortgage on their property. The most significant consideration for creditors is collateral rather than the applicant’s credit. If you can leverage your home as collateral, your credit may not be much of a hindrance. Home equity loans generally have fair interest rates, and you can use the loan for either medically necessary or elective plastic and cosmetic surgeries. Please note that if you default on loan payments, you risk losing your home. 4. Personal Loans Some local banks and credit unions offer loans to borrowers with less-than-perfect credit, and you can use the loan for any purpose. The creditors cover their risk by charging fixed interest rates as high as 36%, depending on the applicant’s credit. Credit unions only give out personal loans to members. Personal loans often have long repayment schedules. While this reduces your monthly payments, it may take over five years to repay the loan. In the end, you’ll pay over double the original loan amount. 5. Hospital Payment Plans When searching for how to get plastic surgery financing with bad credit, consider inquiring with your medical provider. Some hospitals and outpatient surgery facilities offer patient payment plans, allowing you to put down an initial lump sum, then pay off the rest of your bill over time. However, facilities offering this option are limited, and most require a good credit score. Applicants with less-than-perfect credit often need to put down additional collateral and agree to higher interest rates on the loans. 6. Online Lenders Hundreds of online lenders offer loans to applicants with less-than-perfect credit. However, loan amounts tend to be smaller, and the loan terms are often unfair, if not exploitative, to the borrower. Payday loans are the most common, but these have astronomical fees and interest rates, on average, between 100 – 350%. You can use these general-purpose loans for either medically necessary or elective plastic and cosmetic surgeries. However, making payments on time and paying off the balance as agreed is imperative. Failure to do so comes with steep penalties and more damage to your credit. 7. United Credit United Credit provides a breath of fresh air to people with less-than-perfect credit seeking financing for virtually all cosmetic and plastic surgery procedures. These include facelifts, facial reconstructive surgery, liposuction, nose surgeries, breast augmentation or reductions, hair restoration, and many more. Because United Credit works with multiple lenders, applicants have many loan terms from which to choose. United Credit financial partners offer loans up to $25,000* with competitive interest rates and affordable monthly payments**. 8. Medical Credit Card One of the ways to finance plastic surgery is with a medical credit card. These cards are created to help pay for medical bills and usually come with special financing offers during a certain introductory period. For example, some medical credit card providers offer a 0% annual percentage rate (APR) if you pay off your balance within 6 to 24 months. Most medical providers, including cosmetic surgeons, accept these cards. However, take caution when using them, as they can come with high APRs if you fail to adhere to the specified payment plan. If you still have a balance after the 0% APR period, interest can be high, and you can be charged deferred interest from the original purchase date. 9. Installment Loans Consider an installment loan if you’re wondering how to get plastic surgery financing with bad credit. These loans are similar to personal loans, except they come with specific repayment terms. Payments are typically the same throughout the loan, occurring weekly, bi-weekly, or monthly. These loans can have fixed or adjustable interest rates and may be collateralized or non-collateralized. It’s important to note that most lenders consider your credit score, income, debt, and bank account transactions before approving an installment loan. If you don’t make a payment on time, it can hurt your credit score, and you could lose the collateral you put up to get the loan. 10. Personal Credit Card Medical providers typically accept personal credit cards for elective procedures. You can use a low-interest credit card or apply for a new one. However, credit cards can come with high-interest rates, so select an option with a reasonable rate. Consider applying for a credit card with a 0% APR offer. These cards allow you to split the cost of the procedure into monthly payments without interest as long