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Medical loans: how to pay for medical expenses

Written byKoyo Loans
First published6th July 2021
  • Can you get a loan for a medical procedure?
  • What kind of medical loans are there?
  • Should you take the finance option offered by the clinic?
  • Can you use health insurance instead of medical loans?
  • Can you get a medical loan with bad credit?
  • What credit score do you need for a medical loan?
  • What next?

Medical loans are used to spread the cost of private medical treatment.

Because most healthcare in the UK is provided (and paid for) by the NHS, this form of finance is much rarer here than in other countries, in particular the USA.

However, there are some cases in which a patient might choose private healthcare. These include:

  • Cosmetic surgery (which is not generally covered by the NHS)

  • Private dental work (although any clinically necessary treatment will be covered by the NHS)

  • Certain medical treatments which are not covered by the NHS (although in general, anything clinically necessary will be covered by the NHS)

In these cases, it’s possible to use a loan or credit agreement to spread the cost over a longer period. You should think carefully about taking out any type of finance for medical purposes and consider whether or not it is necessary.

If you’re looking for a flexible personal loan of £1,500- 12,000, you can take a look at our loan calculator or make an application at www.koyoloans.com. Representative APR 27%.

Can you get a loan for a medical procedure?

Yes. In general, you can use an unsecured personal loan for many different purposes. While each lender will have different accepted reasons for a personal loan, many lenders will offer financing for medical procedures. The word “medical” is loosely defined here: it can include dentistry, fertility treatments or cosmetic surgery, for example.

It is always best to check whether any medical procedure you need is available free of charge on the NHS, first. In the case of cosmetic surgery and dental work, it’s worth considering whether the procedure is necessary, and if so, whether you could delay it in order to pay for it with savings.

An unsecured personal loan is one of the simplest forms of credit out there:

  1. You borrow an amount that you receive as a lump sum.
  2. You repay it in instalments, with interest on top.
  3. Once you’ve made all the repayments, that’s it!

Can I get a loan for surgery?

Yes: you can get a personal loan to cover the cost of different medical procedures, including medical surgery not covered by the NHS, dental work and cosmetic surgery.

Note that all lenders have different criteria: some will be comfortable lending for medical expenses, while others won’t, so you may need to shop around.

When doing this, you’ll need to keep in mind that too many loan applications (particularly unsuccessful ones) can look bad to other lenders when they check your credit report.

Many lenders (including Koyo) use what’s known as a “soft” credit search when you first apply for a quote – these don’t leave a footprint, meaning that they don’t have an impact on your credit report.

Image showing how avoiding searches can help you to get a car loan with bad credit

What kind of medical loans are there?

There are three forms of financing which are typically used to pay for medical expenses on credit.

Unsecured personal loan

This is one of the simplest types of loan, explained in the section above. You pay interest on the total amount you borrow – the rate is likely to be higher for medical loans (since not all providers consider this kind of lending), and you can use the money you borrow to cover medical bills.

Depending on your creditworthiness, you may be able to borrow tens of thousands of pounds, but most borrowers are likely to have a lower limit. Interest is fixed over the repayment term, so you’ll know exactly what you’ll have to repay.

Secured loans are also available to homeowners, but you stand to lose your house or another major asset if you fail to make repayments, so it’s better to avoid this form of credit if you can.

Want to know more? What is a personal loan?

Credit card

Some medical providers may accept credit cards, in which case you can put the cost of a procedure on your card (rather than paying for it with cash) and repay the balance over time.

While credit cards often have interest free periods, you’ll face high interest rates if you don’t make the maximum monthly repayment required to clear your balance.

That can get expensive, so it’s worth factoring in this additional cost and being honest with yourself about how quickly you’ll be able to pay it – since it can be easy to fall into the trap of rolling over the balance and just making the minimum monthly payment.

Provider finance

In many cases, the medical or dental care provider will offer you finance. In other industries, we’d call this “in-store” finance and it works much like buying a piece of furniture on credit.

In general, the provider will want a deposit upfront and will agree a payment plan with you so that you’ll make monthly instalments – usually over a period of years.

In some cases, these offers can be quite cost-effective since the medical provider is already making money from the surgery and doesn’t need to charge as much for credit. However, it’s worth shopping around, and evaluating your options so that you don’t feel tied to one provider.

Should you take the finance option offered by the clinic?

Finance options offered by the clinic can certainly be competitive, so it’s worth considering the credit that the clinic provides and comparing it to other options.

One thing to be aware of is that clinics have been known to offer low or zero introductory interest rates, which seem very attractive, but ramp up quickly after the initial period expires.

In any case, you shouldn’t feel tied to the finance option offered by the clinic: you’re under no obligation to use it and are well within your rights to go with another provider if you find a better offer.

Can you use health insurance instead of medical loans?

If you require treatment that is not provided by the NHS, it’s possible that treatment would be covered by health insurance.

However, it’s worth noting that most medical insurance policies specifically exclude pre-existing conditions, meaning that surgery you’re already planning wouldn’t be covered. However, if you already have medical insurance, you should definitely speak to your insurer to find out if the treatment you require is covered.

In general cosmetic surgery is not covered by insurance policies, other than under very specific circumstances.

Can you get a medical loan with bad credit?

Yes, but it’s likely that you’ll find it harder. A credit score is one of the first things that many lenders look at, so while it’s not the only factor in their decision, it’s certainly a very important one. However, there’s more to it than that, as we’ll explain in the next section.

What credit score do you need for a medical loan?

While there’s no minimum score required, borrowers with a good credit rating, and a history of repaying credit in full and on time, will find it easier to get approved for a loan, and will be able to access:

  • Larger loan amounts
  • Lower interest rates
  • Longer repayment periods

There’s no “magic number” that lenders look for, but the higher the number, the more likely it is that you’ll be approved for a given loan.

There’s one exception here though: rather than focusing on your credit score, Open Banking lenders use secure technology to safely view your bank account transaction data, allowing them to verify your income and expenditure.

As a result, they’re able to base lending decisions on real-world data, rather than your credit score. Koyo is an example of an Open Banking lender, offering loans of £1,500-12,000 with a representative APR of 27%.

a visual guide to how Open Banking could help you to get a home improvement loan even with a bad credit score.

More info: does a personal loan affect your credit score?

What next?

If you’re sure that private care is the way to go (and that your procedure is not covered by the NHS or any medical insurance you might have), the first step is to cost out the procedure, and then start to look at your borrowing options.

If you’re looking for a flexible personal loan of £1,500-12,000, you can take a look at our loan calculator or make an application at www.koyoloans.com. Representative APR 27%.

And if there are any questions we haven’t answered, let us know in the comment section below!

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