Physician Loans – Personal Loans for Doctors

What are physician personal loans?

Physician personal loans, also called personal loans for doctors, are personal loans that doctors and medical professionals can take out to cover large or emergency expenses, consolidate debt, or other reasons. In many cases, due to doctors often having better-than-average creditworthiness and higher incomes, physician personal loans may have lower interest rates and better terms than the average personal loan.

Personal loan amounts typically range from $1,000 to $100,000 and have terms from 12 to 60 months or more. Interest rates vary based on income, credit score, credit history, debt-to-income ratio, and other factors. They can be secured or unsecured and have fixed or variable interest rates (read more below).

1,077,115

Is the total number of professionally active physicians in the U.S. as of May 2023. California had the most active physicians with 117,674 physicians, followed by New York.

FinFact

Types of personal loans for doctors

Personal loans for doctors can come in a few types of ways. They can be secured or unsecured, and the interest rates can be variable or fixed:

1. Secured loans

In order to take out a secured loan, you must provide some kind of collateral to back the loan. Examples of collateral could be a house, car, savings or investment account, or other asset of value. You may have to take out a secured loan if you have a poor credit score or credit history.

In the event you have poor credit, you appear much higher risk to the lender so they’d require the collateral in case you aren’t able to repay the loan. However, note that if you aren’t able to repay the loan, the lender can seize your asset(s), making secured loans a little more risky for the borrower. That said, secured loans may have lower interest rates than unsecured loans.

Lenders may also require collateral if you request a large loan, such as for a mortgage.

2. Unsecured loans

Unsecured loans are the opposite of secured loans. They do not require any assets as collateral in order to get the loan. While these loans are preferable as they pose less personal risk, loan approval, interest rates and terms are still dependent on your creditworthiness. Because unsecured loans are higher risk for the lender, they typically require higher credit scores for approval.

If you default on an unsecured loan, the lender may send the loan to a collections agency to collect debt, or they could even take you to court.

Examples of unsecured loans include personal loans, student loans, and credit cards.

3. Fixed and variable rate loans

When it comes to interest rates for personal loans for doctors, there are two types:

• Fixed interest rates have a set interest rate that stays the same throughout the life of the loan. If possible, you want to get a fixed interest rate loan because you can easily calculate the exact amount of interest you’ll pay, making it easier to budget. Plus, the monthly payment will stay the same. The downside is that fixed interest rates could be higher or have larger monthly payments.

• Variable interest rates can change throughout the term of the loan. While variable rates seem like a better option because they could be lower than the fixed rate, they could also be much higher. You may want to choose a variable rate loan if you’re not eligible for a fixed rate loan, or if you want low monthly payments and low rate in the short-term. This can help preserve your immediate cash flow, though you’ll likely pay more in the long run.

Reasons to get a personal loan for doctors

Personal loan funds can be used for just about anything, and there are several reasons physicians may want to take out a personal loan:

1. Financing home repair or renovations

Whether you’ve recently purchased a fixer-upper or your home simply needs some repairs or updates, personal loan funds can be used to finance these renovations. Using a personal loan for or mid-sized projects, like new windows or a room makeover, can be a good option. You should especially consider a personal loan if the repairs or renovations will improve your home’s value.

2. Consolidating debt

When you take out a personal loan, you can use the funds to consolidate other high-interest debt you may have. The personal loan should have a lower interest rate and more favorable terms, and you’d use those funds to completely pay off your other debt. Then, you’ll have one consolidated monthly payment and owe less in interest over time, which can help you pay off your debt faster and even save you money.

Compare: Best Debt Consolidation Loans

3. Covering emergency expenses

You never know when an emergency will hit, and taking out a personal loan can help with those unexpected costs. These can be for funeral arrangements, surprise medical or dental expenses, vehicle repairs, and more. In many cases, taking out a personal loan may be preferable to using a high-interest credit card or other alternative.

4. Paying for large expenses

If you don’t want to make a large purchase on a credit card, which could have high interest rates and other charges, you can take out a personal loan. These loans may offer better interest rates and terms compared to alternatives, like a retailer’s lender, home equity loan or line of credit, or short-term loan. You can pay off the purchase over time with more flexibility, especially since personal loan amounts and terms vary.

5. Moving costs

Once you graduate medical school, you may need to move across the state or even across the country for your new career. While local moves may only cost a few hundred dollars, long-distance move costs could total $10,000 or more. If you don’t have that kind of cash on hand, you may want to take out a personal loan to help cover those expenses.

Should you take out a physician personal loan?

While doctors often have higher incomes, that doesn’t mean you’ll never need any financial assistance, especially when you’re first starting out as a provider or opening a new practice. You could experience a job loss, emergency, or other large expenses that you don’t want to put on a credit card or tap into your savings for. In this case, you could consider a physician personal loan.

You should also consider a personal loan for doctors if you:

• Have good to excellent credit.
• Have a lower debt-to-income ratio.
• Can make the monthly payments each month and fit the loan in your budget.
• The credit limits on your credit cards don’t meet your current borrowing needs.
• You don’t have collateral to offer.
• You need to borrow for a shorter period of time (typically 12 to 60 months).

Additionally, you’ll want to make sure you shop and compare several physician personal loan offers before choosing one that works for you. Review factors like loan requirements, fees and penalties, loan minimums and maximums, loan terms, interest rates, and others. If possible, get prequalified for the loan before applying to get a better estimate of what you’ll be approved for.

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