A Comprehensive Comparison Between Medical Loans vs. Personal Loans in India 2024


Medical emergencies can be emotionally and financially overwhelming in India, leading many individuals to seek loans to cover unexpected medical expenses. However, it can be challenging to choose between medical loans and personal loans. This guide compares the key features and benefits of both loan types to assist you in determining which one is most appropriate for your specific needs. 

To make an informed decision about managing medical expenses, it is crucial to understand the key differences between various loan types. This includes examining factors such as eligibility requirements, interest rates, repayment terms and the types of medical expenses covered. By comparing your needs and financial situation to the advantages offered by each loan, you can choose the best option to effectively handle your medical expenses. 

Key Options to Finance Your Medical Expenses in India

Taking out a loan for unforeseen medical costs is a wise choice, particularly for individuals facing financial challenges. This option provides flexibility, allowing you to repay the debt at your convenience without any limitations. 

  • Medical Loan - A form of personal loan that provides financial protection for unexpected medical costs. This type of loan can cover various expenses like hospital bills, prescription charges, surgical procedures, bypass operations, chemotherapy and other related treatments. 
  • Personal Loan - It is an amount of money borrowed from a bank or an online lender for personal use and it is typically unsecured, meaning it does not require collateral. Once approved, you receive the loan amount in full and then repay it over time with interest through fixed monthly instalments. 

Why Is It Important to Understand the Pros and Cons of Medical and Personal Loans?

Understanding the implications of taking out medical or personal loans is crucial in making an informed decision. While these loans can offer financial relief during tough times, it is important to consider the potential drawbacks such as high interest rates and long-term repayment commitments. By weighing the pros and cons, you can make a well-informed choice that aligns with your financial goals. 

  • Choosing the Right Loan: Medical and personal loans have varying features and interest rates, so it is important to understand them to make the best choice and potentially save money. For example, medical loans often offer lower interest rates for healthcare expenses, while personal loans provide more flexibility in how you can use the funds. 
  • Debt Management: It involves understanding how loans contribute to your overall debt and making informed decisions about borrowing and repayment. By being aware of the impact on your budget, you can avoid getting into a debt spiral with unmanageable repayments. 
  • Managing Costs: Medical procedures and emergencies often come with hefty price tags. Considering a loan might be a wise option, as it can offer more manageable payment terms compared to high-interest credit cards. Furthermore, personal loans can be utilized to consolidate high-interest debt, making your financial situation simpler and potentially reducing the total amount paid in interest. 
  • Interest Rates and Fees: Both medical and personal loans generally come with higher interest rates compared to secured loans, which are backed by collateral such as a house. It is important to grasp these rates and any related fees, as this enables you to accurately assess the total cost of borrowing and evaluate offers from various lenders to identify the most advantageous terms. 
  • Budgeting and Repayment: Understanding the repayment schedule and interest rates is crucial for creating a realistic budget that includes your loan payments. This will help you avoid missed payments, which can negatively impact your credit score and result in additional penalties. 
  • Alternatives and Credit Score Impact: Exploring alternative options such as setting up payment plans with medical providers or using emergency savings can be a better choice than resorting to taking out a loan. It is important to note that making timely loan payments can enhance your credit score, while defaults can have an adverse effect. 

What are the Benefits of Choosing a Medical Loan in India?

Medical loans are unsecured personal loans designed to help individuals in times of medical emergencies like accidents or serious illnesses. These loans offer numerous benefits to borrowers such as - 

  • If a hospital does not offer cashless treatment facilities, you may need to pay upfront. However, you can easily apply for a medical loan online to check your eligibility and get approval within minutes. 
  • You can get treatment from any hospital or doctor with a medical loan without any restrictions. 
  • Treatment not covered by insurance due to waiting periods or specific procedures may be financed with a medical loan. 
  • Medical emergencies require quick access to funds, but insurance approvals and liquidating investments can be time-consuming. To address this, personal loans provide a speedy disbursal, allowing for immediate medical assistance. 
  • Medical loans do not require collateral or affect insurance premiums. They rely on your income and do not hinder your financial goals. 
  • Medical loans offer flexible repayment terms, allowing borrowers to schedule personal loan repayments at their convenience with tenures of up to 72 months. 

Read moreTop 5 Benefits of Personal Loans for Medical Expenses 2024

What are the Drawbacks of a Medical Loan?

It is crucial to cosider the negative aspects or dawbacks of a medical loan before taking out a loan, as convenient it may seem during a health emergency. Some of the downsides to keep in mind include - 

  • High Interest Rates: Medical loans usually have higher interest rates than secred loans such as car loans, as they do not require collateral. The interest rates for medical loans can range from 10.99% to 36%, significantly increasing the overall cost of treatment. 
  • Debt Burden: Medical emergencies can create unexpected financial obligations, leading people to take loans to cover the expenses. It is important to ensure that the monthly instalments for these loans are affordable on top of regular expenses. Otherwise,  stretched budget can result in a cycle of debt. 
  • Impact on Credit Score: Missing EMI payments can have a significant negative impact on your credit score. This, in turn, can make it challenging to obtain loans for important investments such as a house r car in the future. Therefore, it is crucial to ensure timely EMI payment to maintain a healthy credit score. 
  • Limited Coverage: Medical loans often do not cover all expenses, so it is important to ensure that the loan amount includes coverage for pre-existing conditions, follow-up care and medication costs. Even with the loan, you may still find yourself requiring additional funds. 
  • Prepayment Charges: Some lenders may impose prepayment penalties if you repay the loan ahead of schedule, adding to your financial obligations if you are able to clear the debt sooner than expected. 
  • Slow Approval Process: Borrowers must meet strict criteria and adhere to specific terms and conditions for approval. The process is slow and can take several days, as it depends on the terms that the borrower qualifies for. 
  • Too Much Paperwork: The borrower must complete lengthy paperwork, providing detailed information and submitting multiple verified identity proofs and supporting documents. 

What are the Benefits of Opting for a Personal Loan for Medical Purposes?

Medical emergencies often arise unexpectedly, requiring immediate access to funds or treatment. While tapping into savings or seeking financial assistance from friends and family are options, a personal loan can provide a quick and convenient solution to cover expenses without depleting your resources. 

Keep reading to learn why personal loans are a valuable resource to turn to in tmes of medical emergencies. 

  1. Use a personal loan for medical emergencies to protect your life goals instead of using your savings. 
  2. Medical emergencies require quick funds. A personal loan can be disbursed within a day or up to 72 hours. 
  3. Personal loans are unsecured, meaning you do not need to provide any collateral. This makes them ideal for times when you need quick access to funds without having to put up any assets. It is a convenient choice, especially during unexpected financial emergencies. 
  4. You can choose a repayment tenure that suits you, usually between 12 to 60 months. Consider your income and needs to decide on the loan duration. Use our online EMI calculator for assistance. 
  5. The personal loan requirements are quite minimal, with only age and income criteria to meet. Additionally, the bank reviews your credit history before approving the loan. Applying for a personal loan online requires minimal documentation and some banks even offer pre-approved loans for existing customers. 
  6. Health insurance plans may have limits on treatments, so a personal loan can be useful for covering all treatments withour restrictions. 

What are the Major Disadvantages of Using Personal Loan for Medical Emergencies?

Factors to consider before choosing a personal loan for medical expenses include - 

  • Comparing interest rates is vital when looking for the best terms on personal loans. This is especially important as personal loan rates can be higher than those for secured or medical-specific loans. By shopping around and comparing rates from different lenders, borrowers can ensure they secure the most favourable terms for their loan. 
  • Assessing your ability to manage monthly loan repayments alongside your usual expenses is crucial. This is especially important when dealing with medical crises, as hefty loan repayments can add to the existing stress. 
  • Defaulting on your financial obligations can have serious repercussions. It can negatively impact your credit score, making it difficult for you to borrow money in the future. Additionally, defaulting may also result in legal consequences such as being sued by creditors or having your assets seized. It is important to honour your financial commitments and seek assistance if you are struggling to make payments.

Tips to Manage Medical Loan Repayment

Repaying a medical loan can be a daunting task, but there are effective strategies to make it smoother like - 

  • Review Bills: Carefully review your medical bills before making any loan payments. It is important to check for errors such as unnecessary charges or duplicate billing. If you come across any discrepancies, contact the provider for clarification and dispute them. 
  • Negotiate Payment Plans: Consider reaching out to hospitals and healthcare providers to inquire about extended payment plans with lower interest rates. You can explore this option and work on negotiating a monthly payment that aligns with your budget. 
  • Calculate Loan Costs: To effectively plan your budget, it is crucial to understand the total loan amount, interest rate and repayment term. Having this transparency allows you to calculate and accurately account for the loan costs.
  • Create a Budget: Start by listing out all your essential expenses like rent. Groceries and utilities. Make sure to allocate funds for loan repayment as well. Consider using budgeting apps or spreadsheets to make this process more efficient. 
  • Minimize Interest: To minimize interest on a medical loan, prioritize paying it off quickly. The high interest rates can greatly increase the overal loan cost. Look into options for increasing monthly payments to lower interest accumulation. 
  • Automate Payments: Setting up automated loan payments is a great way to avoid late fees and ensure that you consistently make progress towards repaying your loan without worrying about missing a payment. By automating your payments, you can save time and effort and also ensure that you maintain a good payment history, which can positively impact your credit score. 
  • Cut Back on Discretionary Spending: Analyze your recent spending habits by going through your bank and credit card statements. Look for non-essential expenses such as dining out, entertainment and impulse purchases. By identifying these areas, you can make a plan to cut back and allocate those funds twards repaying your loans. This approach will help you free up more money to tackle your debt. 
  • Explore Additional Income: Start exploring side hustles or freelancing opportunities to supplement your income and allocate extra earnings towards repaying your loans. This additional income can help you accelerate loan repayment and achieve financial freedom sooner. Look for opportunities that align with your skills and interests to maximize your earning potential. Prioritize repaying your loans by dedicating the extra income from your side hustle or freelance work towards this goal. 
  • Government Assistance: Government assistance programmes can provide financial aid for medical bills based on your location and financial circumstances. It is important to research and determine the eligibility criteria for available options in your area. 
  • Medical Charities: You can explore reputable medical charities that can provide assistance with medical bills, offering relief for the financial burden of healthcare expenses. Research and reach out to organizations that specialize in helping individuals and families with medical expenses, as they may offer support ad resources to alleviate the financial strain of healthcare costs. 


Comparing medical and personal loans in India is essential when dealing with medical emergencies. This comprehensive guide helps individuals make informed decisions by outlining the key features and advantages of each loan option. 

Medical loans are great for lower interest rates and specific healthcare coverage, while personal loans provide faster approval and more flexible use of funds. 

When deciding on a loan, it is important to take into account your specific needs and financial circumstances. Take the time to carefully evaluate factors such as interest rates, repayment terms and eligibility criteria. Additionally, it may be beneficial to consider alternative options such as payment plans offered by providers or tapping into emergence savings before committing to a loan. 

Always remember, making timely repayments is of utmost importance when it comes to maintaining a healthy credit score. This not only empowers you but also enables you to secure favourable loan terms in the future. 

Frequently Asked Questions (FAQs)

Q1: Can I use a personal loan to cover non-medical expenses along with medical bills?

A: Yes, One of the main benefits of a personal loan is its flexibility. It allows you to use the money for various purposes, such as covering medical bills and addressing any immediate financial needs that may arise.

Q2: What if I don't have a strong credit score?

A: It may be difficult to obtain a medical loan if you have a low credit score. However, some lenders may still approve your loan if you have a co-signer with good credit. Medical loans are generally perceived as less risky, but your credit score can still impact your eligibility. Consider exploring lenders who specialize in medical loans to increase your chances of approval.

Personal loans are indeed more attainable even with a lower credit score, but it often means having to contend with higher interest rates.

Q3: Can I use a medical loan for cosmetic procedures?

A: Generally, Medical loans typically don't cover cosmetic surgeries, as they are designed for essential medical treatments. However, there are lenders who may provide loans specifically for elective surgeries, so it's important to understand the terms and conditions before proceeding.

Q4: Can I prepay a medical loan or personal loan?

A: Yes, prepayment is generally permitted for medical and personal loans, but borrowers should be aware that certain lenders may impose prepayment penalties. It's crucial to carefully review the terms of the loan to understand any potential fees associated with prepayment before committing to the loan.

Q5: Can I use medical insurance and a medical loan together?

A: Yes, you can use both medical insurance and a medical loan to cover your expenses. Your health insurance will cover a portion based on policy terms, and if it doesn't cover the full cost, a medical loan can help fill the remaining gap.

Q6: I am a senior citizen. Can I still get a medical loan?

A: Yes, senior citizens are eligible for medical loans, although some lenders may impose an age limit for applicants. It's best to inquire with multiple lenders to determine their specific criteria for age.

Q7: What if I am a self-employed individual applying for a medical loan?

A: Self-employed individuals have the option to apply for medical loans. However, lenders may request additional documents for income verification, such as income tax returns or bank statements showing business income.

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Author: Abhik Das

Abhik Das is a versatile content writer with over 5 years of experience crafting engaging and informative content across diverse industries. His expertise spans the fields of ed-tech, pharmaceuticals, organic food, travel, sports, and finance.

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