In life you often have to deal with unexpected difficulties. It can be especially tough when the problems that hit you out of nowhere are medical. Not only will a person suffering from unexpected illness or injury have to face the emotional difficulty of the situation, they’ll also have to deal with the financial realities.

A secured medical loan may be part of the solution to your medical hardship. Even when you have medical insurance, you’re often going to be faced with high deductibles, and even after the deductible is completely paid, most insurance plans only cover 80% of major medical catastrophes.

The injuries resulting from a single car accident could cause medical bills that run into the tens or even hundreds of thousansds. Most people don’t keep the cash on hand to cover that sort of thing.

So What is a Secured Medical Loan?

Like any other secured loan, a secured medical loan is one where the borrower puts up some kind of collateral to protect the lender from loss in the event that the borrower can’t repay the debt. Here are some examples of things people might put up as collateral:

Their car.
Expensive Jewelry.
Their home (if the loan is big enough to require it).

You May Get Better Terms on a Secured Medical Loan.

Lenders require collateral on loans in order to reduce their risk. You have to think about the circumstances under which a person is borrowing money for medical expenses. If their injury or illness is severe enough to require a loan, it often means the person seeking it won’t be able to work. That causes the prospective lender to be a lot more cautious.

Although on the surface it may seem that a person seeking a secured medical loan is at a disadvantage because they’re having to risk their possesions in order to obtain the loan, the reality is there a few advantages:

First of all, when the loan is secured the lender is likely to charge a lower interest rate than if it was unsecured, because they have less risk in the transaction. If your medical procedure ends up requiring you to borrow tens of thousands of dollars, the lower interest rate offered by a bank on a secured loan will end up saving you thousands in interest you don’t over the term.

Secondly, a lender will probably be willing to create a longer repayment plan when they’re giving a secured loan. They get to earn more interest, but they always have the borrower’s collateral protecting their investment.

Third, it’s often true that when a borrower is willing and able to put up valuable collateral, the bank approving the loan will wave any requirements for a down payment.

The Medical Loan Application Process

Even though the bank’s risk in this relationship is greatly reduced, a prospective borrower will still have to go through an application process. The requirements will be typical of any other loan where the lender needs to feel confident about the borrower’s ability to repay the debt.

The biggest factor in a bank’s confidence about a person’s ability to repay will be income. If a person can show that she has enough income (especially relative to her other debts) to repay the loan, this will really put the bank at ease.

The other obvious factor in the approval process will be the applicant’s credit rating. If you can prove that you’ve behaved yourself well in the past with other credit, you’re much more likely to get the secured medical loan when you need it most.