During a medical emergency, getting hold of appropriate funds is of critical importance. It should usually be a hassle-free experience and should not cause any trouble. That is exactly what a medical loan is for. It is often claimed for medical emergencies.
Operations, surgeries, therapies, cosmetic dental implants, cosmetic facelifts, Botox injections, eye surgery, hair transplant and any general critical or non-critical medical procedure can be funded with a medical loan. These types of personal loans come in handy even when availing treatment for dependents of the borrower.
Medical loan Vs medical insurance
No. Both are completely different. Medical insurance is provided by the insurance company of the insurance holder. The insurance holder pays a yearly premium to maintain the insurance policy. Insurance companies allow cashless treatment of insurance policyholder and/or their dependents. The hospital can then claim expenses from the insurance company after the patient has been discharged.
A medical loan is a personal loan with the purpose of medically treating the borrower or their dependents. It can be taken if the borrower has an insurance policy or not. If a borrower has an insurance policy, then the medical loan taken will generally be the amount outside of the insurance policy coverage. For example, if the insurance policy coverage is only up to Rs.5 lakhs, the medical expenses incurred are Rs. 7 lakhs, then 2 lakhs medical loan can be taken to cover these medical expenses.
When to apply for a medical loan
- When an insurance policyholder wants to fund the medical expenses of a third-party who is not their direct dependent, then they can take a medical loan.
- When an insurance policyholder wants to cover medical expenses for themselves and/or their dependents who are outside of the insurance policy coverage.
- If the insurance policy does not offer the cashless facility, then for immediate medical expenses a medical loan is useful. Although non-existent nowadays, insurance policies that require medical bills to reimburse the medical expense, still exist. Resort to a reliable and solid cash insurance policyholders. When a non-insurance policyholder wants to cover medical expenses of themselves, their dependents and/or unrelated third-parties.
When not to take a medical loan
- If an insurance policyholder can cover medical expenses with their insurance policy coverage amount.
- If an insurance policy non-holder can cover medical expenses with their surplus savings.
Best Utilization of Medical Loan
A medical loan has interest charges comparable to personal loans. Only those who do not have surplus funds need to take this loan or insurance policy coverage. Otherwise, it is a loss of income due to interest charges. Minimum tenure for repayment is 12 months and foreclosure can be made only after that.
Medical Loan and its interest Rate!
A medical loan is a type of personal loan. Therefore, personal loan interest rates are applicable for medical loans too. Personal loan policies and procedures also apply to medical critical care loans. But there is a difference. Unlike personal loans, medical loans are disbursed faster. Usually from 5 minutes to 24 hours.
- High interest is levied on borrowers who cannot furnish adequate documents such as PAN Card, AADHAR card, Salary certificates and who don’t have a good credit score. It is based on the bank’s discretion whether to give the medical health checkup or hospitalization loan or not.
- A better option would be to call the bank directly and check with them.
- Interest rates are starting at 11.99%p.a.
What are no-cost equated monthly instalments medical loans
- The interest cost is borne by the medical treatment centre. The borrower only has to pay towards the principal amount. For example, for a medical loan of Rs.1,20,000, the borrower has to pay Rs.10,000 for 12 months.
- The hospital will pay a subvention charge which is a percentage of the medical loan amount to the lending institution.
What could go wrong with no-cost EMI hospitalization loans
- The hospital could raise the medical expenses to make up for the subvention fee that has to be paid to the lending bank. For a treatment cost of Rs. 1, 20, 000 the hospital could charge Rs.2 lakhs.
- Part of the profits realized from over-charging the patient can be paid as a subvention fee to the lending institution. This still leaves the bank with a profit.
Doing the math before going for a no-cost EMI medical loan
- Compare treatment prices across different hospitals. Read reviews from patients of hospitals. Ask around.
- No private hospital will operate on a social-service philosophy. Therefore, even after paying the subvention fee, the hospital will still look to make a profit. Look for an ethical hospital where one can expect the hospital to make a nominal profit which is not burdensome on the borrower.
Call up your bank and ask them to guide you. Try to steer clear from no-cost EMI loans as much as you can. Complete your research and study on the product aggregators sites with different terms and conditions, tenures, rate of interest, documents required etc.
EMI calculation for a medical loan
A medical loan is no different from a personal loan. The EMI calculation methodology that applies to a personal loan also applies to a medical loan. Certain banks can lend medical personal loans with zero processing fees.
EMI calculation methodology on medical loan
The formula is:
P x R x (1+R) ^N] / [(1+R) ^N-1
Where P is the principal amount.
R is the rate of interest per month.
N is the tenure of the loan in months.
^ is to the power of
Features of medical loan
- Interest rate starting at 11.99%p.a.
- Disbursal amount starts from Rs.1000/- to Rs. 15,00,000/-
- The loan tenure ranges up to 60 months or 5 years
A medical equipment loan is not a medical loan
Often a medical loan is confused with a medical equipment loan. The latter is a business loan to procure medical equipment to set up a business such as a hospital, clinic or laboratory. It is also called as healthcare finance. So, don’t mistakenly mention these when talking to a customer care rep.
If used wisely, and taken only when needed, a medical loan is a great saviour in times of need. It is advisable only to take this healthcare personal loan to cover critical or dire-need medical expenses.
After Availing a Medical Loan:
If an individual applies for a medical loan directly to the bank, the chances of obtaining it is more but likely at its own pace. In banks, the highest priority goes to the highest credit score holder thus pushing your profile behind. Whereas, a loan aggregator can seize this opportunity to get you a loan at the earliest. Buddy Loan considers your credit score important but the need of the hour even more important.
A medical loan is a type of personal loan. It can be used to pay medical bills and cover a wide range of treatments. Whether it is an individual in need of urgent medical procedures or coping with an injury, a medical loan is a must for such situations.
Also, medical debt being a major problem, with the rising costs of the healthcare industry and certain restrictions on health insurance coverage, an instant medical loan is a way out of this inconvenience.
Medical loan functionality
Medical loans can be used to pay for or cover different healthcare costs that may not be completely covered by existing insurance. There are also certain instances where a health insurance plan may not cover a medical procedure. It is wise to opt for an online medical loan in cases such as this.
Different lenders provide medical loans, and the process of applying for one is quite similar to applying for any other type of credit. In case an individual needs funds to pay for a treatment or medical procedure, he/she can use the amount received through the loan.
The implication of taking up a medical loan
A medical loan allows one to manage their healthcare expenditures on a pre-defined or custom created payment schedule. This can be a major step on the quest to help one to pay for healthcare needs and avoid the pressure of worrying about collecting the necessary funds or struggling to pay off in one go.
Some of the various medical situations and procedures where medical loans might help are mentioned below:
- Fertility treatments
- Visit Gynaecologists or obstetrician
- Cosmetic surgery, weight loss related surgery, etc
- Unexpected events that need medical attention like accidents, disease, etc
- Consolidated medical debt
If you have taken a medical loan, then you may be able to get the required funds for a medical situation much faster when compared to medical insurance, as you will already have the amount in your account. Also, you don’t need to have collateral in case of unsecured medical loans. Buddy Loan aggregator disburses this type of loan. There is also the fact that you may get better financing rates and options through medical loans in comparison to the medical service provider.