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  • A medical loan is a personal loan which provides you with the funds you need to receive medical treatment or undergo surgery. It can also help pay for other medical necessities, including equipment or medication.
  • This can be handy if your medical expenses are essential or urgent, or if your healthcare insurance will not cover all your medical costs. But keep in mind you’ll be charged interest and potentially a raft of fees.
  • Apart from the interest rate, keep an eye out for a medical loan’s upfront fees, ongoing fees, as well as other non-standard fees. The loan term will also affect the amount of interest you pay over time.
  • Make sure the application process is fast enough for you to receive the money you need to pay for your medical procedure when you need it.

What are medical loans?

When hit with unexpected hospital bills or other medical costs, the right type of personal loan could be an option to meet your health needs. A medical loan is a personal loan which provides you with the funds you need to undergo medical procedures. It can also pay for other medical necessities, including equipment or medication.

None of us wants to face serious medical issues and a healthy lifestyle can help keep the doctor away. Yet there are times when you may face hefty medical expenses and your health insurance, or the public system may not cover all the costs.

Taking out a personal loan to cover your medical bill could help you receive the treatment you need when it's really necessary. Being in a road accident, for example, may lead to prolonged health care with operations and recuperation. It doesn't help your recovery if you're worried about how to pay for everything, so a personal loan for your medical procedure could be worth considering for some people.

Why do people use medical loans?

Healthcare insurance doesn't always cover you for all your medical needs at a particular time, and you should always check to see exactly what you are entitled to. You'll be covered for many things but, depending on your age and medical history, there may be some things that aren't covered.

And in some cases, health insurance may cover your accident or injury, but you may find yourself out of pocket covering the gap between how much the insurance provider is willing to cover and what the hospital is charging

Dental treatment, for example, can be expensive and if you have an emergency problem or need some long-term root canal work, you may have to make a significant contribution to the cost. This is where a medical bill loan can help take the financial pressure off. You’ll be able to pay back the costs with interest over time, but you’ll be able to receive the treatment you need without waiting for funding.

A personal loan can also help people facing longer-term hospital bills or post-accident cosmetic surgery, if that’s something you’re considering. Even in cases where cosmetic surgery is not deemed medically necessary, you could still potentially secure a personal loan. 

What are the main features of medical loans?

Just like there’s no such thing as a free lunch, no loan from a financial provider is ever free. Lenders make money from lending money to customers and that’s why it’s on you to look for the best deal. It is important to be very clear about the costs you will be incurring and how you will pay back the loan.

If you’re shopping around for a personal loan to cover your medical costs, check these features before you make a decision.

  • Interest rate – The lender may offer you a higher or lower rate depending on how much you want to borrow and your credit history. If you own assets, you could consider securing a loan with collateral for a lower interest rate. However, you do run the risk of having the asset seized if you default on your loan repayments. You may also want to compare whether a fixed or variable interest rate would better suit you.
  • Fees – 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, as well as other non-standard fees. An example of a non-standard fee is break fees, which are charged if you pay off your debt earlier than the agreed loan term.
  • Loan term – Your loan repayments will be spread across the agreed loan term, which could range between one and seven years. The amount of interest you pay will depend on how long your loan term is.

What do you need to know about medical loans?

Good health is one of the most important things in life for most people. Securing the money you need for a medical procedure through a personal loan could work for you but is not necessarily a good option for everyone.

In some cases, a medical personal loan could provide you with the money and peace of mind you need to get better sooner or to get urgent procedures carried out swiftly.

That being said, make sure to check the turnaround times before you apply. If you are unable to receive the cash from the lender fast enough to pay for your medical procedure when you need it, there could be little point in going ahead with the loan.

It’s also important to only take out a loan you know you can afford. If you don’t make repayments or make late repayments, this could have an impact on your credit rating.

Consider using RateCity’s Personal Loan calculator to work out the regular repayments, so you know what to expect.

Frequently asked questions

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

How are personal loans regulated?

Personal lenders in Australia are regulated by ASIC (the Australian Securities & Investments Commission) and must follow responsible lending rules. That means they can’t lend money without making “reasonable inquiries” about a borrower’s financial situation and ensuring the loan is “not unsuitable” for them.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

Where can I get a personal loan?

The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:

There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.

How long do personal loans take?

Depending on the lender, some personal loan applications can be approved in as little as one hour, or you may need to wait until the next business day. If approved, you may receive your money on the same day, the next business day, or within the week.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can you get an emergency loan on Centrelink?

When many lenders assess a borrower’s income to determine whether they can afford a loan’s repayments without ending up in financial stress, they may not count Centrelink payments as income for this purpose.

Before applying for an emergency loan, it may be worth contacting a potential lender to find out if they accept applications from borrowers on Centrelink.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

Can I get a $2000 loan on Centrelink?

If more than half of your income comes from Centrelink benefits, it may be more difficult to have a $2000 loan application approved. Many lenders will check if you can afford a loan’s repayments on the income from your job before they’ll approve an application, and many won’t count Centrelink payments when assessing your income for this purpose.

Some lenders may offer $2000 loans to borrowers on Centrelink – consider contacting potential lenders to check before applying.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.