Your health insurance coverage may cover all or part of a medical procedure. When it doesn’t, however, you may seek a medical loan in Canada to help you cover expenses. Staying prepared is one way to remain smart about money.
Keep reading for a definitive guide to emergency funding for medical procedures in Canada.
Understanding Medical Loans in Canada
You may seek a personal loan to finance a wide range of medical procedures. These procedures could include:
These medical procedures can cost thousands of dollars.
Moreover, they’re not always covered by conventional health insurance or medical plans. Many Canadian patients choose to forgo procedures because they’re not covered by insurance.
Typically, you’ll need good credit to apply for a medical loan. However, there are options for medical loans for bad credit or less-than-perfect credit—more on that in a moment.
Facts About Medical Loans in Canada
Many Canadians feel they’re unprepared for medical emergencies. A Statistics Canada survey reveals 35% of Canadians say they cannot cover a $2,000 medical expense in the near future. Our diagram below visualizes what consumers said about their financial preparedness.
You can prepare for managing medical expenses by creating a “slush fund.” You’d allocate a portion of your salary to the fund for emergencies. You can use the fund for any purpose, including dental, medical, and therapeutic treatments.
Suppose your family wants an in vitro fertilization (IVF) procedure. This procedure can cost as much as $100,000.
Your slush fund can help cover this kind of expense. In fact, you can use your slush fund to cover any medical-related expense that might arise.
The Benefits of Thinking Ahead
In the face of the pandemic, more people have been thinking about how to manage their expenses. Staying prepared for unforeseen medical expenses is one way to achieve this goal.
Emergencies are a normal—and often inevitable—part of life. Accordingly, it’s wise to prepare for unforeseen health issues and expenses. By doing so, you won’t find yourself in a tricky financial situation during a medical emergency.
Medical Loans for Bad Credit
Saving for a medical emergency is especially important if you have bad credit. If needed, you could acquire a medical loan with bad credit. With a low credit score, however, you’ll most likely find financing medical fees quite expensive.
As an alternative, you may want to apply for a medical credit card. You could also consider negotiating with your healthcare provider. Nevertheless, you may find a medical loan meets your needs for healthcare-related expenses.
Financing Medical Emergencies
If you ever need to apply for a medical loan in Canada, it can serve as the most critical loan for which you’ll ever apply. You could need financing options for a range of procedures, such as:
- Cosmetic surgery
- Dental rehabilitation
- Elective surgery
- Major medical therapy
These kinds of procedures can change your life as well as the lives of those near you. Yet, it’s essential to consider every available option before applying for a medical loan.
With research, you could find an alternative lending source like an online lender. Also, your care provider might let you negotiate a more affordable rate for services. You can even combine several of these options to make your medical expenses more manageable.
Medical Loans in Canada: Weighing Your Options
Any medical loan has both advantages and disadvantages. In most cases, people turn to an unsecured personal loan for this purpose. It’s essential to assess the benefits and drawbacks of each type of loan as it pertains to your situation. You must develop a custom-tailored borrowing strategy.
In the end, you want to improve your health without overburdening yourself financially. It’s vital to avoid pitfalls like high-interest rates and strict repayment terms. For example, you may undergo a surgical procedure requiring a mandatory period of rest. In this instance, a loan requiring immediate repayment will not serve your best interests.
Does Your Current Insurance Cover Your Medical Needs?
Obviously, the best-case scenario is for your health insurance or universal coverage to cover all medical expenses. At times, however, health insurance can prove confusing.
Most insurance companies operate a 24-hour benefit hotline. Take advantage of this service, and speak with a representative to learn more about your coverage. The health insurance representative can walk you through your entire health care plan. They can also show you how it will meet your needs for an upcoming procedure.
The worst thing you can do is go through a procedure uninformed. You don’t want to undergo a procedure and find out afterward your insurance doesn’t cover your expenses for services you’ve already received.
Negotiating Medical Expenses
The fee for medical procedures isn’t always set. Sometimes, you can negotiate your medical costs.
Suppose you have an upcoming medical procedure. In that case, it’s a good idea to call your care provider’s billing department. The billing department can give you an estimate of the cost of your procedure. Next, you must contact your insurance company to find out how much your plan covers.
With this information, you can contact the billing department of your service provider. Together, it’s possible you can find ways to reduce the cost of your procedure.
How to Get Loans for Medical Expenses
If you find yourself unprepared to cover medical expenses, you may seek an unsecured personal or signature medical loan. Usually, a lender will not advertise they offer medical loans. Often, however, banks are compassionate about important healthcare-related needs.
In some cases, acquiring an unsecured loan is relatively straightforward if you meet a few criteria. These criteria include:
- Good credit
- Low income-to-debt ratio
- Stable employment
- Stable income
- Strong credit history
If you’re approved for a medical loan, you might receive between $5,000 and $35,000 to cover expenses. Typically, banks and credit unions offer a relatively low annual percentage rate (APR).
Finding the Right Medical Loan
It’s vital to find a loan product that’s a good fit with your ability to repay it. Accordingly, it’s a good idea to make comparisons and shop around for the right loan.
You must make sure you receive the amount of funding you need as well as competitive terms and rates for your loan. By shopping around, you can benchmark multiple lenders against each other. Once you’ve narrowed down your options, you can use this information to negotiate rates.
Often, you’ll receive funding within 24 to 48 hours if you’re approved. Once you receive your funding, you can move forward with your procedure immediately.
Loan Types for Medical Expenses
There are several financing options for medical expenses. You must figure out which options are available based on your financial background. However, you must also find a loan product that meets your needs.
Let’s have a look at some of the most common medical loan options in Canada.
Again, most Canadians apply for unsecured personal loans to cover medical procedures. With good credit, it’s relatively easy to secure an unsecured loan. You can also customize an unsecured loan to meet your unique financial needs.
Suppose you have less than ideal credit, but you own an asset like a car or a home. In that case, you most likely can acquire a secured loan to cover your medical expenses.
The asset you provide will serve as collateral. As a result, you’ll gain access to a larger loan amount with more favourable conditions and terms.
Line of Credit
A line of credit works similarly to a standard credit card. It allows you to spend up to a certain amount. However, the lender will only charge interest on the amount of the credit line you use.
This kind of financial product is an excellent option if you have recurring medical expenses. Also, the interest rate for a line of credit is typically lower than a traditional credit card.
Instead of seeking a traditional loan, you could also try Peer-to-Peer (P2P) lending. This kind of lender specializes in medical financing.
Usually, you can borrow up to about $35,000 for this purpose. In some instances, however, you may find you’re eligible to borrow more if you have good credit and a substantial income.
The lower your current credit score, the more likely lenders will perceive you as a lending risk. Alternative lenders have less rigorous approval processes compared to traditional banks and credit unions.
If you have a low or an average credit score, you could find that an alternative lender is your only source for securing financial help. This may be your only option for medical loans for bad credit.
P2P Loans: Things to Consider
You should understand there’s a drawback to P2P loans. Typically, a P2P loan has higher loan fees and a higher APR compared to traditional financial products.
With this in mind, it’s important to read the fine print of any P2P loan agreement. The agreement could contain language stating you’ll pay a higher APR in the event of nonpayment or late payment.
It’s important to read every word of a P2P loan agreement. The agreement will tell you whether you can manage the terms of the loan.
Grants for Medical Expenses
You may feel as though you have insurmountable medical bills. In that case, you might consider applying for a grant through an advocacy group or government program.
For example, Insure Kids Now can help you access low-cost or free health and dental insurance. Meanwhile, The Medical Assistance Tool can help you find cost-sharing programs and other resources to help you lower the cost of medication. The Pharmaceutical Research and Manufacturers of America trade group sponsors the tool.
If you have a rare disease, you can apply for assistance through The National Organization for Rare Disorders. The organization can help you cover expenses related to insurance premiums, co-pays, medication, testing, and travel.
Remember that sometimes all it takes is a bit of extra research to lower your medical bills. This approach is especially true if you’re in a situation where you need medical loans for bad credit.
Credit Cards and Medical Expenses
You never want to put medical expenses on your credit card. Credit cards carry a high-interest rate.
The interest on a credit card can go as high as an APR of 23%. If you were to charge medical expenses to your credit card, you could end up in debt for a lot longer than if you were to apply for a medical loan in Canada.
Imagine you charge a medical bill of $10,000 on your credit card. In that case, you might end up paying $2,300 a year in interest. You’ll also have to pay any added cardholder fees.
Minding Your Finances During Emergencies
It’s not uncommon for someone to swipe their credit card to pay for medical expenses. However, you may want to rethink the consequences of doing so.
It’s especially prudent to reconsider using your credit card for procedures such as cosmetic surgery. For many consumers, this type of procedure is an impulse purchase. In the midst of a skillful sales pitch that’s brought up a range of intense emotions, people can have a strong desire to feel better about themselves.
Nevertheless, it’s critical to take your time when making this kind of buying decision. Your financial health is second only to your physical well-being.
Times to Avoid Medical Loans in Canada
You may have the desire for a cosmetic or elective procedure. Instead of borrowing for the procedure, consider delaying it and saving to cover any expenses. For example, you might keep your emergency fund liquid but earn dividends from investments.
You might also look into using your health insurance for partial coverage if possible. After exploring these options, you might consider covering the balance with a smaller signature loan.
In this way, you can spread your health expenses among multiple cash and non-cash options. When you make these kinds of prudent financial decisions, it shows maturity in financial management.
In the end, understanding your financial options is the smart thing to do—even if it’s just a contingency plan.
Stay Prepared for Life by Learning About Finances
The Canadian Institute for Health Information values the national medical care spending average at more than $8,000 per citizen. Of course, not everyone spends the same amount on healthcare, with some people incurring little to no expenses. Still, can you afford not to stay prepared for a medical emergency?
Fortunately, you now know a bit more about medical loans in Canada. You also know how to prepare for medical expenses, should they arise.
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According to a survey conducted by Statistics Canada, 35% of Canadians say they would face challenges if asked to cover a $2,000 expense in the next month.Creating a “slush fund” that you allocate a portion of your monthly earnings to is a sound personal finance tactic. The “slush fund” can be used for any purpose, including medical, dental, surgical, or therapeutic treatment. If IVF is a requirement for you and your family, for example, setting up a separate fund for this purpose will save you from having to take out a larger loan to cover the cost of the service (which can run up to $100,000).
Having cash on hand is always the best way forward in any medical-related situation. But, given that emergencies do come up, cash that has been saved coupled with responsible borrowing will help lessen the impacts of a sudden debt as a result of a health issue or other expense.
Be sure to plan accordingly, so you don’t find yourself in a tricky financial situation.