Although unsecured loans with higher interest rates are not typically advisable, they can present potentially valuable opportunities for some physicians.
Physicians are often faced with the necessity of utilizing loans to help pay for education and expenses. There are different types of loans, all of which come with specific benefits and considerations—one specific type of loan that physician might consider, depending on their particular situation, is an unsecured loan (a loan that does not have an asset backing it).
Sun Trust is one institution I have run across that now offers a private loan in the amount of $5,000 to $100,000, for example, to both physicians in training and attending/in-practice doctors.
Unsecured loans, generally, come with a higher price to pay, often with interest rates in the high single digits and low double digits with the fixed rate side.
Although, as an advisor, I’m not typically in favor of taking out unsecured loans especially at medium- to high-interest rates, I do potentially see value in this for a few circumstances:
1. Paying off higher interest credit cards, residency relocation loans, or other higher consumer debt.
2. Quick access to be able to buy in to a practice or surgery centerespecially if financials would point to high cash flow from profit sharing or increased participation in ancillary income streams.
3. Cover overhead costs with for a new practice.
4. Helping make ends meet for additional training years at lower incomes.
Loan terms and details tend to vary greatly from state to state and, depending on your personal financial situation, taking on debt isn’t always the answer, but for some folks, having access to this amount of capital could open doors to further training or quicker access to a larger income stream that could potentially pay for itself and more.
Jon C. Ylinen is a Financial Advisor with North Star Resource Group and offers securities and investment advisory services through CRI Securities, LLC. and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC. is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. but is independently owned and operated.
Please consult a financial professional for specific advice in relation to your individual circumstances. This should not be considered as tax, specific loan repayment for an individual or legal advice. This is not a recommendation of any strategy or product in particular. 908307/ DOFU 04-2014.