Personal Loans for Health Care Workers: What to Know

Health care workers have the same financial needs as anyone else, and that's true whether they are in school or fully established in the workplace. Funds from a personal loan can be used for almost any purpose, such as to pay for school books and supplies, living expenses, moving costs, or furnishings for a new home.

Personal loans are also commonly used for debt consolidation, particularly when someone has high-interest credit card debt they want to pay down. There are several reasons personal loans make sense in all of these situations, but the biggest is the fact they come with competitive interest rates and set monthly payments.

What Is a Personal Loan for Health Care Workers? 

Personal loans for health care workers, as with any other type of personal loan, typically come with fixed interest rates, a regular monthly payment you agree to ahead of time, and a set repayment term.

Health care professionals who are already in the workforce may have a leg up when it comes to qualifying for a personal loan. That's because, in addition to credit requirements, personal loan lenders generally require that applicants have a regular income.

How Personal Loans Work

The specifics of personal loans vary based on the company offering the loan and the requirements they put in place. For example, some lenders offer minimum loan amounts that start at $1,000 or less, while others might require that you borrow at least $5,000. Maximum loan limits also vary; many lenders cap their loans at $35,000 or $40,000, yet some let you borrow up to $100,000 if you qualify.

Repayment terms for personal loans typically run from 24 to 84 months, though some go as long as 144 months. The annual percentage rates (APRs) on personal loans can be anywhere between 5% or so to 35% or more. Some loans also have origination fees that are deducted from the loan amount upfront.

Finally, it's worth noting that the vast majority of personal loans are unsecured, with no requirement for collateral. However, secured personal loans that do require collateral (such as a car title, money in a savings account, certificate of deposit (CD), etc.) also exist.

Why Do Health Care Workers Need Personal Loans?

Health care workers can use personal loans for nearly any reason. However, there are some scenarios where these loans are particularly popular, including:

• Acquiring a practice or starting a new one
• Auto repairs
• Debt consolidation
• Home improvements
• Medical or other large bills
• Moving costs
• New career expenses
• Professional equipment or supplies
• Wedding expenses

Many lenders will not approve personal loans that will be used to pay college tuition and fees. Some lenders also prohibit using personal loans to pay off student loan debt.

Where Can Health Care Workers Get Personal Loans? 

Health care workers can get personal loans from banks, credit unions, peer-to-peer (P2P) lenders, and online lenders. It's possible to obtain a personal loan through a brick-and-mortar financial institution you already have a relationship with or through one that operates branches but also has an online presence.

Generally speaking, however, you'll find many of the best personal loans online. That's because, by and large, online lenders without a physical location have lower overhead and can offer lower interest rates and fees as a result.

How to Qualify for a Personal Loan as a Health Care Worker

Health care workers face the same approval requirements for personal loans as anyone else, although these requirements do vary from lender to lender. Here are some of the things a lender will typically consider:

• Debt-to-income (DTI) ratio: Most personal lenders are wary of borrowers who have too much other debt, so they may have maximum debt-to-income (DTI) ratio limits in place.
• Credit scores: Borrowers will need to have a certain minimum credit score with some lenders, while other lenders don't have this requirement.
• Proof of income: Applicants need to be able to show they can repay the loan, such as pay stubs from work, a W-2 form, recent tax returns, or other documentation that the lender may require.

How to Apply for a Personal Loan As a Health Care Worker

You can apply for a personal loan on your own if you feel you can meet the eligibility requirements. Some lenders also allow joint applications or personal loans with a cosigner. Whichever route you choose, here are the basic steps:

1. Compare lenders: Spend some time comparing personal loan companies based on their rates, fees, repayment terms, minimum and maximum loan amounts, and so forth.
2. Try to get pre-qualified: Some lenders will pre-qualify you and assign you an interest rate, without a hard inquiry on your credit reports, which can have a negative effect on your credit score. That makes it easier to shop around, although being pre-qualified doesn't mean you're guaranteed to get the loan.
3. Fill out the application: Find a lender you like and fill out the loan application. Be prepared to supply information on your income, employment situation, and whatever else they ask.
4. Supply necessary documentation: You may need to upload documents to prove your address, a copy of your driver's license or similar identification, pay stubs, W-2 forms, or recent income tax returns.

If you are approved for a personal loan, most lenders will transfer the money to your bank account within a few business days.

Pros and Cons of a Personal Loan

Like any other way of borrowing money, personal loans have their pros and cons:

Best Personal Loans for Health Care Workers

As mentioned, personal loans are offered by a broad range of lenders. Here are some that are likely to work well for borrowers who need a lump sum of cash and will be able to pay it off over 24 to 84 months.

The Bottom Line

Personal loans be a lifesaver in financial emergencies, but they can also be used for many other purposes. For example, it often makes sense to use a personal loan for debt consolidation since rates tend to be much lower than those on most credit cards. If you do take out a personal loan, it's best to borrow no more than you absolutely need and to make sure you keep up with the payments so you don't damage your credit score for the next time you need to borrow.