Christ Yoder
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Insurance is an excellent product to mitigate future risks. Health insurance protects you from medical emergencies. You get financial support for complex medical treatments depending on the size of your insurance coverage. Suppose you have taken a health policy of Rs. 10,000,000. Your treatments to this extent will be covered by your policy. But imagine if your actual bills were more than your policy coverage and you didn’t have the cash to pay the difference. In addition, pre-existing conditions are covered after a waiting period. (Check your policy for exact terms.) In such a situation, a loan could play an important role as a last resort.
During a medical emergency, you need to make quick decisions and organize the necessary short-term funds. A medical loan is a borrowing tool specially designed to help you in such medical emergencies. Likewise, there are generic lending instruments available in the market, such as personal loans and collateral loans that lend for a wide range of requirements.
Medical Loan vs Personal Loan-Key Differences
A medical loan is authorized for a specific reason, while a generic loan can be used for any requirement. A medical loan is unsecured in nature, similar to a personal loan. You can say it is a special type of personal loan. Interest on medical loans is generally lower than on a generic personal loan. In this, the fund is directly transferred to the hospital where the treatment was used, while a personal loan is credited to the client’s account and the client then uses it according to his needs.
A medical loan is processed much faster than a personal loan. Normally, disbursement takes about three days, while a personal loan can take anywhere from a few hours to a few days, depending on the lender’s policies.
In the context of a personal loan, banks and financial institutions only check the eligibility criteria of the applicant and then decide to authorize or refuse the loan. But in a medical loan, some NBFCs do the eligibility check of the whole family together and therefore increase the chances of getting the loan even if the patient’s credit score is bad.
Who offers medical loans?
Medical loans are offered by NBFCs such as Tata Capital. Banks also offer medical loan products based on personal loans. Nationalized banks offer a personal loan facility which can be used for payment during a medical emergency. Almost all nationalized banks offer a personal loan facility. Apart from NBFCs and banks, loan companies also offer medical loans in partnership with banks and hospitals.
Loan limits normally vary between Rs. 30,000 and Rs. 30,000,000. Such a loan is normally unsecured. However, if the loan amount is large, the lending institution may request collateral or request collateral from a third party depending on its policies.
Should I take out an emergency loan?
When you don’t have much time on your hands and you urgently need medical treatment, your first priority should be to build up the fund as soon as possible. As with any loan, be careful not to pay exorbitant fees and read the fine print carefully before signing the dotted line. You should also check the prepayment and pre-closing fees.
Some companies and financial institutions may waive processing fees and reduce interest rates. However, you need to look at the fine print and understand if there are any hidden costs.
If you have time to decide on the best way to get a loan, consider all the options available: personal loan, medical loan, secured loan (if you have assets to mortgage, such as gold, an FD bank , etc.), and then apply for the best option.
As such, it has become very convenient to apply for a personal loan today. With several paperless loan options available, you can apply for your loan from your phone and get a quick disbursement, especially if there are pre-approved offers for you.
Finally, if you need to take out a loan, choose one that offers you the best interest rate, low processing fees, and hassle-free repayment.
The author is CEO, BankBazaar.com.
