SoFi

Debt isn’t always due to having made financial missteps. The most cautious, savvy savers among us can see their plans quickly undone by unexpected costs. Medical debt is among the most unexpected and urgent costs anyone can have. The question of how to pay for medical bills can cause enormous stress when there’s no money in the bank to pay hospital and doctor expenses, up front or later on.

There’s no question that medical bills can go from tedious to terrifying fast. Fortunately, if you feel unable to afford medical bills, there are strategies to find relief.

Make Sure the Charges Are Accurate

If you haven’t already, go through each bill line by line to make sure you received the services and medications listed. Mistakes happen — providers can make billing and coding errors, and insurers sometimes deny coverage — so don’t just accept what you see.

It’s important to be prepared to make some phone calls, maybe even write some letters, if you can’t get answers or satisfaction. Yes, your insurance company and service provider should be figuring out all of this for you, but if they don’t, it will be up to you to do so.

You’ll probably find yourself talking to a different person every time, so making a note of each person’s name and the date and time that you spoke will help make your records more complete. Ask for a supervisor if you aren’t getting the help you need.

Don’t Ignore Your Bills

You may have run out of ideas when thinking about how to pay medical bills you can’t afford. But pushing those medical statements into a drawer so you don’t have to look at them is not the answer.

If the billing statements have started to accumulate — or worse, a collection agency is calling — it can be tempting to ignore the situation altogether. But those paths of least resistance can lead to negative consequences.

If your debt goes to collection, that record can stay on your credit report for up to seven years. And to recoup what is owed, the owners of the debt may opt to sue you. If they win their court case, they could garnish your wages or place a lien on your property.

Don’t Use Credit Cards to Pay Off Your Bills

So what to do if you can’t afford medical bills? Even if you’ve decreased your medical debt through negotiation or by having billing mistakes removed, you’ll have to pay the portion of the remaining balance you’re responsible for.

If you have enough available credit on a credit card, that’s one way to pay a medical bill — but unless it’s a very low-interest card, it probably isn’t an ideal option.

•   Interest will accrue each month until the balance is paid in full, which will increase the total amount paid.

•   If you miss a payment or make a late payment, your next billing statement will include a late-payment fee and accrued interest.

•   And if your payment becomes 60 days past due, your interest rate may go up.

Medical Credit Cards

Some providers might offer a medical credit card as a way to manage your payments. That’s not the same thing as a payment plan, so be cautious before signing on. The card may come with a no-interest promotional rate that allows you to make payments without interest for a designated period of time, but you’ll likely be required to pay the full balance by the end of the promotional period or you’ll be charged interest retroactively.

That’s because the interest is typically deferred, not waived, on medical credit cards. And even if you’re just a wee bit short of making full payment, the penalty could be significant.

Balance Transfer Credit Cards

Financial institutions tend to make balance transfer credit cards sound like the answer to every financial problem, but keep in mind that if you can’t pay off the balance within the designated introductory period, your account will revert to the annual percentage rate (APR) you agreed to when you signed up.

Ask Your Provider or Hospital for a Discount

If the costs are, indeed, all yours to pay and you just don’t have the money, you still may be able to get some help.
Nonprofit hospitals are required by federal law to have a written financial assistance policy for low-income patients. The law does not require a specific discount, nor does it specify eligibility criteria, but nonprofit hospitals are required to offer such financial assistance and make their patients aware of it.

Some states also require nonprofit hospitals to offer free or discounted medical services to patients with certain income levels.

With nonprofit or for-profit hospitals, you may be able to work out a payment plan, which, for medical debt, is often interest free. If you’re able to pay the bill, just not all at once, this could be an option to consider.

Negotiate

Negotiating medical bills is possible and often successful. Be prepared to meet with someone in the provider’s financial or billing department. When you’re worried about how to pay off hospital bills, making an appointment to meet someone in person can be a smart move — this is someone who might have the authority to reduce at least some of your balance, and they might offer other options for how to pay medical bills you can’t afford.

You may have to show paperwork proving your current income (a tax return or paycheck) and you should come with an amount in mind that you’re comfortable paying either in a lump sum or over time.

Finding Additional Help Paying for a Medical Bill

Government Benefits

Medicaid and the Children’s Health Insurance Program (CHIP) help to insure families who can’t afford health insurance or can’t get it through their employer. Both programs are joint federal/state programs, but may be called by different names in different states. To apply, you’ll need to provide accurate information about your income and any government benefits you already receive.

Recently, several government agencies jointly issued a rule banning surprise billing and balance billing. This ban, which already applied to Medicare and Medicaid billing, is being extended to employer-sponsored and commercial insurance plans.

•   Surprise billing happens when a patient is seen by a provider who, unknown to the patient, is not in their insurance network of covered providers and bills for their services at an out-of-network rate.

•   Balance billing is when a provider bills the patient for the remainder of a medical bill after the patient and the patient’s insurance company has paid their respective portions.

State Sponsored Programs

Each state has a program to help with medical bills and costs. Search by state on the State Health Insurance Assistant Programs site for details. Some states do offer programs other than Medicaid or CHIP, but it might take some research to find the right fit for your situation.

Private Assistance Programs

Some nonprofit financial assistance programs help pay certain medical expenses for specific conditions, such as cancer, leukemia, and others. There are also organizations that provide financial assistance with general medical costs like copays, deductibles, or prescriptions.

Medical Loan

Another solution for how to pay for medical bills may be an unsecured personal loan, which might have a lower interest rate (depending on the rate you’re approved for) and more flexible repayment terms than a credit card.

One advantage of a personal loan for medical expenses is that it might give you some leverage when you’re trying to negotiate a medical bill. You may be able to negotiate a discount for a lump-sum payment rather than stretching out the payment over time.

Some disadvantages of using an unsecured personal loan to pay medical bills are you’ll still have to pay interest on the loan, and loan approval may be difficult if you have poor credit.

The Takeaway

Taking a step back and looking at all your options is the best way to get started figuring out how to pay medical bills you can’t afford. You can often deal with these sometimes unexpected costs by using multiple methods and resources: checking your bill for accuracy, negotiating the balance due, and seeking out financial assistance if you can’t afford to pay what is owed.

If a personal loan is an option you choose, consider a SoFi Personal Loan. An unsecured personal loan from SoFi has competitive, fixed rates and a variety of terms. The loan application can be completed online, and you can find your rate in just a few minutes.

Check out SoFi Personal Loans to help pay for medical debt

FAQ

How long do I have to pay a medical bill?

Typically, doctors, hospitals, and other healthcare providers give a billing statement with a due date, often within 30 days. However, payment terms can vary, depending on insurance coverage, individual agreements, and local regulations.

If you’re unable to pay the bill in full by the due date, it’s a good idea to contact the healthcare provider or billing department to discuss possible payment arrangements or ask about financial assistance programs that may be available.

What is the minimum monthly payment on medical bills?

The minimum monthly payment depends on the provider and agreed terms. Some providers allow payments based on affordability, while others set a fixed amount or percentage of the total balance.

What happens if you don’t pay your medical bills?

Initially, the healthcare provider may send reminders or contact you to request payment. Late fees or interest charges may be applied to the outstanding balance. If the bill remains unpaid for an extended period, the healthcare provider may transfer the account to a collection agency. The collection agency will then pursue the debt, which can include phone calls, letters, and reporting the delinquent debt to credit bureaus.

Do medical bills affect your credit score?

Unpaid medical bills can potentially impact your credit, but not right away. Health care providers typically don’t report to credit bureaus, so your debt would have to be sold to a collection agency before it appears on your credit report. Generally, this doesn’t happen unless your bill is 60, 90, or 120+ days past due.

Even after your bill goes to collections, the consumer credit bureaus give you a full year to resolve your medical debt before the collection account is added to your credit history. And, if the unpaid bill is under $500, they won’t add the account to your credit report and it won’t impact your score.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL0423020

We take our household appliances for granted. Ovens, refrigerators, dishwashers, washers, and dryers — they’re all essential for everyday life, but we just always expect them to work. When one finally breaks down and we realize it’s time to buy a new, expensive replacement, it can be a bitter pill to swallow.

But what if you don’t have the cash on hand to pay for a new appliance? That’s where appliance financing, also called an appliance loan, comes in.

What Is Appliance Financing?

Appliance financing refers to buying a new appliance on credit. Rather than paying out of pocket for a new appliance, you’ll pay it off over time in monthly increments, like a house or car payment.

While this means you don’t have to spend money from your emergency fund or borrow money from a relative to pay for a replacement fridge or washer, it does mean you might face additional fees, like interest.

You can get appliance financing in a number of ways, including taking out a personal loan, paying for the appliance with your credit card, and exploring in-store financing, such as in-store appliance loans or rent-to-own options.

How Does Appliance Financing Work?

When you can’t afford a new appliance but need one because your old one has broken down and is beyond repair (or not worth the cost of repair), you can take out an appliance loan. How this type of financing works depends on the method of financing you use.

For example, if you pay for the appliance with a credit card, you’ll simply make your credit card payments as you would for any other purchase. But if you take out a personal loan from a bank or credit union, you’ll have a set number of years to pay off the loan, and there may be certain fees on top of the interest charged.

Methods of Appliance Financing

There are a few key ways of paying for an expensive appliance you can’t afford.

Personal Appliance Loans

You can take out a personal loan from a financial institution for almost anything, including home renovations, a wedding or vacation, debt consolidation, and, yes, even a new appliance.

Credit score requirements for a personal loan vary depending on the lender. Often, borrowers with bad credit can still qualify for personal loans, but interest rates and fees may be higher.

Additionally, lenders might have origination and prepayment fees, so it’s a good idea to read a lender’s loan details thoroughly before signing on the dotted line.

Personal loan terms generally range from two to seven years. Monthly payments will be higher on a shorter loan, but interest rates are typically lower — meaning you’ll spend less on interest over the life of the loan.

Recommended: What Is a Signature Loan?

Credit Cards

If you have a credit card with a high enough limit, you can also pay for an appliance with your card. Just keep in mind your credit card’s APR, or annual percentage rate — if you can’t pay off the balance in full by the due date, you may rack up interest charges quickly.

If you have a cash back or travel credit card, you could earn significant rewards by paying for an appliance on credit. For instance, refrigerators cost anywhere from $430 to $10,600. A 3% cash-back rewards card would earn you $318 on the purchase of a $10,600 fridge.

In-Store Financing

Many retailers offer their own financing options for large appliances, often via a store credit card. Unlike other credit cards, these cards are closed-loop, meaning you can only use them at that store.

These stores, like Lowe’s and Home Depot, may offer special perks for financing with them. This could include no interest if you pay in full within a set number of months or a percentage discount off the purchase price.

Some retailers may also offer rent-to-own options. In this scenario, you’d make a weekly or monthly payment until you’ve paid off the appliance. If you miss a payment, the store will take the appliance back. Rent-to-own fees can be high, making it more expensive for consumers by the time the appliance is paid off.

What Can Appliance Financing Be Used For?

You can use appliance financing for any kind of home appliance, but it’s generally not a good idea to take out a loan for luxury appliances like espresso makers and immersion blenders. Instead, experts advise only taking on loans for appliances that are considered more of a necessity, like:

•   Ovens and stovetops

•   Microwaves

•   Dishwashers

•   Refrigerators

•   Kitchen sinks

•   Washing machines

•   Dryers

Pros and Cons of Appliance Financing

Thinking about using appliance financing for your next household purchase? Let’s weigh the pros and cons:

Pros

Appliance financing offers the following upsides:

•   No waiting: When your washer or oven breaks down, you need a replacement. Sure, you can go to the laundromat and rely on microwave dinners temporarily, but ultimately, you’ll need to purchase a new appliance. If you don’t have the money in your bank account or are saving for other goals, you can instead take out an appliance loan or pay with your credit card to ensure you get the appliance you need without having to wait.

•   Home renovation: If you’re doing a larger home renovation, like remodeling your kitchen, you may be purchasing all-new appliances. Those costs can add up quickly. By using a personal loan for appliances — or even a home renovation loan for the entire project — you can get everything you need, rather than replacing appliances one at a time.

•   Rewards: If you finance your appliance with a rewards credit card, you may earn cash back or miles on your purchase. Or, if you use in-house financing from the store, you may qualify for special terms or even a discount.

Cons

Meanwhile, consider these downsides of appliance financing as well:

•   Higher cost: When you take out a loan for home appliances, you’ll likely pay more for the appliance through interest and fees. Even if you put it on a credit card, you could incur fees if you don’t pay off the balance in full by your next statement due date.

•   Credit score requirements: While bad-credit borrowers can typically get a personal loan, some consumers with low credit scores may have trouble qualifying for in-house financing or credit cards without high fees.

•   Temptation to spend beyond means: Making a low monthly payment instead of paying the full price upfront can create the illusion of affordability. That means you might be tempted to buy an expensive appliance that’s actually outside your budget — after all, the monthly payment looks manageable. Just remember that you’ll have to make that monthly payment for several years.

Recommended: How to Pay for Emergency Home Repairs

The Takeaway

Appliance financing makes it possible to purchase a new appliance when your old one breaks down and you don’t have the cash on hand. Whether you need a new refrigerator, washer and dryer, oven, or dishwasher, an appliance personal loan, in-store financing, or credit card might be the way to go.

Thinking about funding your new appliance with a personal loan from SoFi? You’ll enjoy competitive SoFi personal loan interest rates, and same-day funding. Check out your personal loan rate in just 60 seconds.

FAQ

Which appliances can be financed?

You can finance virtually any appliance if you qualify for a personal loan or pay with a credit card. Retailers that offer in-house financing may only offer their programs for specific appliances, however. Before financing, just keep in mind that it’s not a good idea to finance luxury appliances that you don’t need or can’t afford. Instead, most experts advise using appliance financing for necessary appliances priced within your means, such as a refrigerator or washing machine.

What is the credit requirement for an appliance loan?

Credit requirements for appliance loans vary depending on the type of loan. Borrowers with bad credit typically can find personal loans for appliances, though these will come with high interest and fees. Rent-to-own programs don’t have a credit check. But if you want to take advantage of a retailer’s in-house financing, you may need a credit score of 580 or higher, though requirements vary by store.

Photo credit: iStock/Talaj

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.