Medical Loans for Bad Credit

Updated: June 13, 2024 Author:

Key Takeaways Financing for urgent medical care in the private sector can help improve your health faster. Medical loans for bad credit are available from specialist lenders with more emphasis placed on affordability than credit history. Amounts available to those with impaired credit ratings tend to have upper limit caps of £25,000 to £50,000, opening up the possibility for urgent medical treatment such as hip replacement surgery or knee surgery to anyone with the ability to afford the loan repayments.

What Is A Medical Loan?

A medical loan is classed as a personal loan. For several years, longer NHS wait times have led to a significant increase in people turning to self-pay options for private medical treatment for disabling conditions, such as knee or hip replacements with costs for surgery being upwards of £10,000. Without a health insurance policy to cover such costs, people are taking out what’s coined as a medical loan to cover the cost of treatment, enabling them to get back to full mobility and/or better health faster. 

With a bad credit score, obtaining such finance can feel like it’s out of your reach, and while there’s no denying it can get costly, money worries shouldn’t add to your troubles which is where a medical loan can help. A medical loan can be used to cover part or all of the costs of a variety of treatments including those available on the NHS and those not such as certain cosmetic or fertility treatments.

Medical loans can range from anywhere between £1,000-£500,000, although with a bad credit score, upper lending limits imposed by lenders are typically capped between £25,000 to £50,000 as they are variable by lender. Loan repayment terms can be as short as 6 months or go right up to 30 years depending on the provider. 

Can I Get A Medical Loan With Bad Credit?

Having a bad credit score is not a barrier to getting a medical loan. When you’ve health worries on your mind, everything can feel so much worse than it is and financial stress shouldn’t be a concern when you’re trying to focus on accessing the treatment you need.

CCJ’s, unemployment, and retirement can be red flags for some lenders for certain loan types but when it comes to getting a medical loan, your financial history is only one small part of what lenders take into account. This is great news for you if you have a less-than-desirable financial record. There are lenders out there that will consider people will bad credit. Those are the companies to focus your efforts towards as banks and other mainstream financial institutions have narrower eligibility requirements. 

Private medical care providers will often offer finance packages which means you can find the right loan both for your treatment and your financial situation. Even if you can’t get approved for finance through a company partnered with a private healthcare firm, some direct lenders can provide independent loans to fund medical procedures privately. Some healthcare firms will have contracts in place with a medical loan provider, while others may refer to you to a credit broker to assist in finding a suitable finance package to cover the cost of the treatment you need.

Medical loans are usually offered as either a secured loan or an unsecured loan and here’s what you can expect from both options:

Unsecured Loans

An unsecured loan means that no assets are put forward as collateral. If you have a bad credit score lenders will usually view you as a more risky lender and without securing the loan against anything it could cause interest rates to be quite high. This is not to say that an unsecured loan isn’t right for you if you have bad credit, they can work well if you’re not a homeowner or don’t have anything or value to secure a loan against but just be aware that if you have a low credit score you are more likely to pay a higher interest rate than someone who is a homeowner or who has a good credit score.

Secured Loans

A secured loan is a loan taken out against something of value. For a higher amounts, which a medical loan often is, this is usually your house or car. Of course, this means you have to own the things you’re offering as collateral. Secured loans usually come with lower interest rates as lenders have that safety net of being able to recuperate their money However, if you fail to pay back the loan you do risk losing your home or car. 

What Can I Use A Medical Loan For?

A medical loan can be used for a wide variety of treatments from emergency surgery to dental work. Both of these are available on the NHS but long wait times can pose more of a risk and add unnecessary stress which is why there’s been a rise in private healthcare. 

Typically, cosmetic surgery isn’t available on the NHS unless the work you want poses a health risk or a severe psychological risk so again a medical loan can help with any cosmetic procedures from an ever-growing list of treatments. 

A medical loan can also be used for fertility treatment. Typically procedures like IVF are available on the NHS but many look at private care to get quicker results and to avoid the IVF postcode lottery. 

What Fees Are Associated With A Medical Loan?

Regardless of your credit score, anyone taking out a medical loan will be charged interest. Some lenders may offer a set amount of time interest-free whilst others will add on interest from the get-go. How much interest you’ll pay depends on your personal circumstances though. For example, some lenders will offer lower rates to homeowners or those taking out a secured loan. One certainty though is that if you have a bad credit score you will be charged higher interest as you’re seen as a risk to lenders.

When it comes to other fees, this will again depend on your lender and your personal circumstances. Some lenders may charge an upfront loan fee, and some may add it to your monthly repayments. If you use a broker then they typically charge a broker fee to cover the work that they’ve done for you, in this case finding a medical loan that best suits your circumstances. 

Understanding exactly what fees and interest you’ll be paying before you agree to any loan will help you manage your finances and decide if a medical loan is right for you. 

What Happens If I Fail To Pay The Loan?

Finding the right loan for your financial circumstances will go a long way to protecting you from defaulting on a loan. However, it’s always good to remember that if you fail to make one or more scheduled loan repayments on time then it’s classed as a loan default and will go on your credit file for the next six years. Too many of these can severely lower your credit score, limiting your access to mainstream finance providers.

Beyond this, if you’ve taken out a secured loan then your assets are also at risk. Any lender will want their money back and if it comes to it your car or home could be repossessed to cover the loan amount.

If you’re struggling to pay back your medical loan, it’s best to speak to your lender straight away as they may be able to offer some options to help. It’s best to be honest and come up with a plan that can help you get your payments back on track. 

Is a Medical Loan Required Now?

This an important question to be asking yourself because the reason for a bad credit score is the information on your credit report and that drops after six years. After that time, information drops from your credit report, giving you an instant boost, and more favourable interest rates. Check your credit reports and see what dates are being reported. Add six years to those and that’s the dates those negative entries will disappear. The debts won’t go away, but the data won’t be visible to lenders past those dates. That’s when you’ll get better finance deals. For medical loans for non-urgent treatments such as dental implants as an alternative to dentures, or hair transplants to address hair loss in men or women, those may be things that can be postponed until your credit situation improves.