The short version
- A medical loan is a personal loan for treatment Medicare and your health fund don't fully cover.
- Ask your provider about payment plans first, which can be interest free.
- Check the treatment's total cost and what you'll get back before you borrow.
Paying medical bills with a personal loan
Medicare and private health insurance often leave a gap for surgery, specialists, IVF, hearing aids and other treatment. A personal loan can spread that gap over one to seven years. Any general-purpose loan below can be used for medical costs.
Before you borrow, get a written quote with all fees, check what Medicare and your health fund will pay, and ask the provider about a payment plan, which may cost less than a loan. Public hospital treatment and bulk-billing may also be options.
Your protections
Personal loans from licensed lenders are covered by the National Consumer Credit Protection Act. Lenders must check the loan is not unsuitable for you, and you can complain to the Australian Financial Complaints Authority (AFCA) if something goes wrong.
Look at the comparison rate as well as the interest rate. The comparison rate adds the lender's standard fees to the interest rate for an example loan, so it shows the cost of two loans on the same footing.
Pros
- Treatment sooner. You don't need to wait until you've saved the full cost.
- Set repayments. You know what you'll pay each month and when it ends.
- Pay the provider in full, which can bring a discount for paying up front.
Cons
- Interest adds to the cost of treatment.
- If the treatment doesn't go as planned, you still owe the full loan.
- An extra repayment while you may be off work recovering.
Alternatives
- A payment plan with your doctor, dentist or hospital, often interest free.
- Your health fund. Check your extras and hospital cover, and any gap cover.
- Early release of super on compassionate grounds, for some treatments. The ATO has the rules.
- A No Interest Loan (NILS). If you're on a lower income, community lenders offer loans of up to $2,000 for essentials, with no interest or fees.
What you'll need to apply
Most lenders ask for the same things, and having them ready speeds up approval.
- Proof of identity, such as a driver's licence, passport or Medicare card.
- Proof of income, usually your last two payslips, or tax returns and financial statements if you're self-employed.
- Details of what you spend each month and what you already owe, including credit card limits.
- Your address history and, for a secured loan, details of the asset you're offering as security.