Buy Now, Pay Later for Health Care: How It Works

Buy now, pay later loans break health care bills into multiple smaller payments. Consider terms and financing alternatives first.

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"Buy now, pay later" has taken off for retail and travel purchases, and now companies like Walnut offer BNPL for health care costs. This payment option allows patients to split medical bills into small monthly payments that may include interest.

BNPL loans for health care offer relief from one-time payments of expensive medical bills, but borrowers should ensure the monthly payments are manageable. Alternatives like traditional payment plans with providers or saving for pre-planned medical procedures are worth considering first.

How does BNPL for health care work?

Buy now, pay later for health care can be an option for those looking for elective or cosmetic surgeries, procedures without insurance coverage or high deductibles, or for people who don't qualify for financing from a bank or online lender.

A handful of companies are starting to offer buy now, pay later programs for health care. Depending on the lender, the process can start as a payment option at the doctor’s office directly or as a service where you provide your bill for the procedure. One company, Walnut, works directly with patients, who send a medical bill — or the details of a planned procedure — to a Walnut agent.

Companies check eligibility through pre-qualification, which typically involves a soft credit pull that doesn’t hurt your credit score. Some lenders will also assess a larger financial picture. Walnut, for instance, considers current economic conditions as well as your payment history if you're an existing Walnut customer.

Loan amounts and terms vary depending on the BNPL provider and may be considered on a case-by-case basis. Walnut offers terms of three, six, 12 or 48 months. Patients apply, manage and make monthly payments online or with a mobile app.

Interest rates and fees also vary, depending on factors like a borrower's creditworthiness and the treatment. Some qualified borrowers may receive zero-interest loans. Walnut says if you're charged interest, the rate may be "between a high single-digit and low teens."

As with any financing option, it’s important to always compare costs, terms and other features among different lenders.

Should you consider BNPL to cover health care expenses?

Depending on the interest rate, a BNPL loan can be an expensive option for covering medical costs. Consider a few scenarios to help you assess if it makes sense for you.

Consider BNPL for health care if:

  • You can get an interest-free loan. Well-qualified borrowers may receive a no-interest loan.

  • You can afford the monthly payments. Before committing to a loan — no matter how small — determine if your budget can comfortably handle the payments through the full term.

Don’t consider BNPL if:

  • Your health care provider offers its own payment plan. Your physician’s office may already offer low- or no-interest payment plans. This situation is ideal as it allows you to negotiate terms directly with your provider rather than having to go through a third party.

  • The interest rate is high. Some lenders can have an APR as high as 30%. A $3,000 loan with a 30% interest rate and 12-month term would cost $510 in total interest.

  • You have high debt. Are you already paying back other loans or carrying high credit card balances? If so, be cautious about taking on more debt. A large debt amount can result in missed payments and financial stress.

  • You qualify for assistance. Based on the procedure, some health care providers offer financial assistance to uninsured and underinsured individuals. Speak with your physician to see if you qualify for any hardship programs.

Alternative ways to pay for health care costs

There could be better options for managing the cost of a medical bill than using a BNPL loan.

Traditional payment plan with the provider. If your medical bill is high, ask your doctor if working out a payment plan is an option. This allows you to build and commit to a personalized plan that splits the bill into affordable monthly installments, often at no extra cost.

Family loan. You may get a lower interest rate and more favorable terms with a loan from a family member. Create a contract detailing terms and conditions, and weigh the potential effect this arrangement can have on the relationship.

Financial assistance. If you’re experiencing economic hardship, you might be eligible for financial assistance through a charity organization or government program. See if you qualify for assistance before taking out a loan.

CareCredit. CareCredit is a specialty credit card offered at 250,000 providers. Depending on the provider location, you could be eligible for short-term financing at 0% interest if the balance is paid off by the end of the term (six, 12, 18 or 24 months). Check with participating providers to see if you qualify.

Personal loan. Personal loans can be borrowed from a bank, credit union or online lender and paid back in monthly installments. APRs are generally from 6% to 36%, and terms are typically two to seven years.

Online lenders allow you to pre-qualify with a soft credit check, while credit unions typically have lower rates and flexible terms. Still, a personal loan is likely the most expensive option to cover medical costs, so consider alternatives first.

Frequently asked questions

BNPL allows consumers to break up purchases into small installments over months, sometimes with no interest.

Many BNPL options allow you to pre-qualify with a soft credit pull that doesn’t hurt your score, but missing even one monthly payment may cause your score to drop.

Some providers offer BNPL options, while others may work with you to develop a customized payment plan. Ask your provider if they offer either option.

While they may offer payment flexibility and low interest costs, BNPL loans can lead to impulsive spending on items you can’t afford. Always consider your monthly budget before agreeing to any loan.

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