Compare medical personal loans

In Australia, Medicare and private health insurance may help with the cost of some of your healthcare expenses, but it's unlikely you'll be covered for all your medical needs.

Dental treatment, for example, is an often expensive healthcare cost that Medicare typically won't cover. Even if you have private health insurance, dental work is generally an optional extra that you might not have. 

So, if you have a costly dental emergency or need some longer-term root canal work, you may be significantly out of pocket. This is where a medical loan can help take the financial pressure off, so you can receive the treatment you need without delay and pay back the costs over time.

Some other types of medical procedures that you may be able to use a personal loan for include:

• Dental procedures
• Cosmetic surgery
• Elective surgery
• IVF and fertility treatment
• Laser eye surgery
• Medication
• Hospital bills and expenses
• Radiology
• Rehabilitation

There are many different features to consider when choosing a personal loan, and what might be suitable for one borrower may not be suitable for the next. So, it pays to do your research.

If you’re shopping around for a personal loan to cover your medical costs, consider the following features before you make a decision:

Secured vs unsecured

A secured personal loan is a loan that’s secured by an asset, such a car, which is used as collateral for the money borrowed. Car loans are the most common type of secured loans as the car itself can be used as security on the loan. Medical loans, however, are more likely to be unsecured. Although, it is still possible to get a secured medical loan if you have an asset to put up as collateral, such as your house. 

Unsecured personal loans tend to have higher interest rates than secured personal loans, as they pose a higher risk to the lender. But while secured loans might offer you a lower interest rate, you are at risk of losing your asset if you fail to repay the loan.

Interest rate

The lender may offer you a higher or lower interest rate depending on how much you want to borrow and the strength of your credit history. For example, borrowers with good credit ratings will generally be offered more competitive interest rates than borrowers with bad credit scores. You may also want to compare whether a fixed or variable interest rate would better suit your needs.

Comparison rate

Comparing personal loan rates is an important part of the comparison process, but remember that the lowest interest rate doesn’t always amount to the cheapest product. That’s because interest rates don’t factor in fees, which can really add to the total cost of the loan. This is where the comparison rate may come in handy, as it includes both the interest rate and the main fees payable, which can give you a better idea of the loan’s total cost. If two personal loan options have the same interest rate, but different comparison rates, it may mean that the loan with the higher comparison rate charges higher fees.

Extra features

Some personal loans may offer extra features that could be important to you and how you pay off your loan. Some of these include:

• Extra repayments: Making additional repayments on top of your regular repayments is one way to pay off your personal loan sooner. However, not all lenders will allow you to do so, some may charge a fee, and others may have a limit.
• A redraw facility: A personal loan with a redraw facility allows you to withdraw any extra repayments you’ve made and return them to your bank account. This may be helpful if you want to pay less interest on your personal loan, but still want access to your money. Keep in mind that you may be charged a fee for using this feature.

Fees

It's important to remember that the cost of the loan is not limited to the amount of interest charged. Interest may be a lender’s main form of revenue, but the fees they charge could also be hefty. Look out for upfront fees, ongoing fees, and other non-standard fees. Some of the fees you may be charged include:

• Application fees
• Establishment fees
• Monthly fees
• Extra repayment fees
• Early repayment fees
• Redraw fees
• Exit fees

As with all credit products, it's important to weigh up the potential benefits and disadvantages before making your decision. Here are some worth considering:

Before you jump into your personal loan comparison, it may be helpful to know what other options there are - just in case there's an alternative that's more suitable for you. Here are some other finance options that might be worth considering:

• Credit card:A credit card could give you more flexibility if other costs pop up during or after a medical procedure. But keep in mind, credit cards generally have higher interest rates than personal loans, and don't have a structured repayment schedule.
• Buy now, pay later (BNPL): BNPL services are apps or online platforms that allow you to pay for something today that you then pay back in smaller, even segments. You may not be charged interest for using a BNPL service, but you could be charged fees.
• No Interest Loan Scheme (NILS): NILS is a no interest small loan offered to eligible low income earners that can be used to borrow up to $1500. While there are no credit checks, NILS loans can only be used to pay for essential goods and services, including medical expenses. To qualify, you must meet the eligibility criteria.
• Payment plan: In certain circumstances, you may be able to access a payment plan option offered by the medical practice at which your procedure is taking place. Reach out to the practice directly to find out.

If you are not an Australian citizen or permanent resident, you may find it more difficult to meet the eligibility criteria for a standard personal loan. In this instance, one of these alternative finance options might be better suited to your situation.

Your loan repayments will be spread across the agreed loan term, which is the amount of time you have to pay off your medical loan.

Many personal loans come with loan terms of between two and five years in length, while plenty of lenders offer loan terms as short as one year and as long as seven - and sometimes even more.

The length of time you take to pay off your loan will depend on what the lender offers and what works with your budget.

Keep in mind that the length of your loan term will largely determine how much you pay in interest charges. Generally speaking, the longer the loan term, the more affordable your repayments may be, but the more interest you'll likely pay in total. Whereas the shorter your loan term, the more expensive your repayments may be, but the less interest you'll be charged.

RateCity's personal loan comparison tools can take some of the hassle out of shopping for a medical loan. To get started, consider utilising the following:

Personal loan comparison table

A personal loan comparison table, like the one on this page, can be a helpful tool when narrowing down your medical loan options. You can search by loan amount and loan term and use the filters to find products that may be more suited to your needs.

Personal loan calculator

RateCity’s personal loan calculator can give you an estimate of how much your medical personal loan repayments may cost based on the amount you’d like to borrow, your preferred loan term and interest rate. The repayment calculator can also provide you with an estimate of the total interest payable and total amount payable over the life of the loan, based on weekly, fortnightly or monthly repayments.

Real Time Ratings™

Real Time Ratings™ is a system that ranks personal loans based on your own individual requirements. It gives each personal loan a score out of five stars, based on loan costs and flexibility, in real time as you use the site.

For information specific to your personal financial situation, consider reaching out to a personal loan broker or financial adviser before you begin the online application process.