» MORE: Best bad-credit loan options

What is a medical loan for bad credit?

A medical loan is an unsecured personal loan used for health care expenses. Unsecured personal loans don’t require collateral, and they have fixed interest rates. Personal loans are paid back in monthly installments over the loan term, generally from two to seven years.

Medical loans can be used for out-of-network charges, emergency procedures or high deductibles. Individuals and families without insurance coverage may consider a loan for health care needs.

Specific uses for medical loans include:

• Dental work.

• Cosmetic surgery.

• LASIK.

• Mental health treatments.

• IVF and fertility treatments.

• Gender-affirming surgery. 

• Pet care.

If you have multiple medical bills, a loan can also be used to consolidate those expenses into a single monthly payment.

How do bad-credit medical loans work?

Here are key factors to understand about bad-credit medical loans.

Interest rates: Annual percentage rates for personal loans typically range from 6% to 35.99%. While your credit score can significantly influence the APR you receive, some lenders consider additional criteria like education or job history. Still, borrowers with bad credit can expect an APR at the high end of a lender's range.

Fees: Some lenders charge an origination fee to cover the loan processing cost. This fee can range from 1% to 10% of the total loan amount and is typically deducted before disbursement. Other fees may include late payment fees.

Loan amounts: Depending on the lender, personal loan amounts can range from $1,000 to $50,000. Know how much you need for your medical expenses, as borrowers with low credit scores may not qualify for the highest loan amounts.

Loan terms: Loan terms affect your monthly payment amount and total interest costs. A shorter term may mean higher monthly payments, while a longer term can cost more in interest.

For example, here’s how the loan term affects a $5,000 loan with a 21% APR:

How to get a medical loan with bad credit

1. Review your credit score. Your credit score can determine your eligibility for a loan and how much you can get. Check your credit report for free and look for any incorrect delinquencies or potential errors. Try to resolve past-due balances on your accounts since missed payments can significantly impact your credit scores.

2. Figure out how much you need and can budget for. Your medical expenses will often determine how much you need to borrow, but you can also use a personal loan calculator to determine what you can afford. You’ll want a medical loan with payments that fit your budget.

3. Get pre-qualified. Pre-qualifying allows you to see potential loan terms, APRs, amounts and payments so you can compare offers and choose the best one for your budget. Most online lenders allow you to pre-qualify for a loan using a soft credit check, which doesn’t affect your credit score.

4. Add a co-borrower or collateral: Co-signed, joint or secured loans are less risky for lenders and can increase your likelihood of approval. You may even get a lower rate. With co-signed loans, the co-signer is responsible for repaying the loan if you miss payments. A secured loan requires collateral that you can lose if you default on the loan.

5. Apply. You can formally apply once you choose a loan that best fits your needs. Online lenders let you complete the application through their website, and the funds will be deposited into your bank account if your application is approved. 

» MORE: Tips to boost your chances of approval

How to compare medical loans for bad credit

Affordable APRs and payments: APR is the total cost of a loan, including interest and fees. It allows you to make an apples-to-apples comparison between loan costs. Look for lenders with rates below 36%, which is the maximum that financial experts agree is affordable.

Credit reporting: Making consistent on-time payments toward your loan can help improve your credit. Choose a lender that reports your payments to at least one major credit bureau — preferably all three (Experian, Equifax and TransUnion).

Funding time: Consider the amount of time it will take to receive the money. Is the medical expense an emergency now or a procedure planned for the future? Some online lenders approve and disburse loan funds the same day after approval, while others take up to a week.

Customer support: Some lenders provide support through multiple customer contact channels, including an app, while others may offer assistance by phone or email only. Consider how you would like to manage your account and the level of customer support you might need.

Other features: Depending on the situation, some lenders provide features like hardship plans or flexible payment options that may help if you hit a financial speed bump. They may also offer ways to monitor your credit score and help plan for financial goals.

Other ways to pay medical bills

It's best to consider a medical loan only after you’ve tried low- or no-cost options. Here are other funding options to help you cover medical costs.

Payment plan: Medical providers may offer payment plans that allow you to pay a medical bill in monthly installments, typically with no interest. The amounts and terms depend on the agreement you negotiate with the provider.

Family loan: A family loan can be a low-interest option to fund medical expenses. A successful arrangement includes a formal written agreement outlining interest and terms between family members. Also, consider IRS guidelines and a family loan's impact on the relationship.

Credit union loan: Credit unions are not-for-profit organizations that may offer loans with lower interest rates and more flexible terms than online lenders. During the application process, they’re also more likely to consider your overall financial picture. However, credit unions require membership and may not offer an option to pre-qualify.

CareCredit: CareCredit is a specialty credit card for financing health care expenses. The card can be used at more than 260,000 health and wellness providers, and applicants are subject to credit approval. CareCredit has a standard APR of 29.99%, but there are promotional financing options like zero-interest terms, which require you to pay the balance in full by a set time to avoid retroactive interest charges.

Nonprofit or charity: The Patient Advocate Foundation and the National Organization for Rare Disorders are nonprofit organizations offering payment assistance for medical expenses like copays, medications and treatment. PAF works with patients with chronic illnesses, while NORD supports patients with rare diseases.