Most U.S. health insurance plans don’t offer dental benefits. Approximately one in four1 Americans say they’ve done without dental care due to a lack of health insurance coverage.
Practices that offer dental financing for patients are better able to offer higher-quality procedures and will often attract more new patients and keep existing patients for longer than practices that don’t offer financing plans. But while the benefits of financing are clear, many dental providers struggle to find the ideal balance between risk and ROI, especially when dealing with patients who have a low credit score.
One solution is to consider dental patient financing from Dental Intelligence, which handles all the administration and risk of providing patient financing. But even when using a third-party solution, dental practices must understand how the process works and what they must do to prepare before implementing a financing solution.
Common Financing Options for Dental Procedures
Patients with good credit scores can often secure alternative financing to pay for expensive procedures. Unfortunately, many of these options involve taking on another debt, which can make these options unappealing for individuals with low incomes or bad credit scores.
Personal loans are unsecured loans offered by banks, credit unions, and online lending platforms. Since they’re unsecured, these dental loans often have relatively high interest rates and, depending on the provider, may also have expensive administration fees and hefty late payment penalties.
Dental financing for patients can include using credit cards in several ways to pay for procedures. These include:
- Add to an existing card: The most convenient way to pay for dental procedures for most patients is to increase the limit on an existing credit card and pay that off in monthly installments.
- Medical credit cards: These cards can only pay for medical procedures for a specific network of providers. Many of these cards are interest-deferred, which means that patients don’t pay interest on their debt as long as they pay it off within the deferral period.
- 0% APR credit cards: Similar to a medical credit card but with more flexibility, 0% APR cards offer a relatively long interest-free period, as long as patients pay off their debt within that timeframe.
In-House Financing Plans
In-house dental financing for patients allows practices to tailor repayment plans for their patients. Some practices will offer their own financing options, while others will rely on third-party providers to take on the risk and administration of these financing options.
Internal vs. External Financing
Practices have two distinct options when offering financing plans: internal, where the practice handles the payment plan, and external, where the practice outsources financing to a third party. Each option has drawbacks and benefits, so it’s vital to evaluate both when considering which is best for your practice.
Internal financing often seems like the simpler option — you just need to work out a monthly payment schedule with your patient and let them pay you back. However, this method comes with many risks, such as individuals being unable to meet their obligations. Also, some financing practices may turn your practice into a lender, and you’ll have to comply with federal and state regulations regarding consumer financing transactions.
If you opt for internal financing, you’ll need to develop a financing plan that addresses every aspect of patient financing, including:
- Complying with all regulatory statutes and federal and state laws regarding lenders
- How you’ll charge interest rates and whether you’ll have any fees related to financing
- Training staff on how to prepare disclosure and finance documents
- Record-keeping processes that comply with the law
Becoming a lender requires a lot of planning and regulatory expertise. If you decide to follow this option, consult a knowledgeable attorney specializing in consumer finance law before implementing your plan.
External financing relies on practices working with third-party credit providers that will issue funds to the patient for a particular dental procedure. These plans mitigate much of the risk associated with becoming a lender, as your practice will receive the money regardless of whether the patient makes their monthly payments. Instead, the third-party provider will be responsible for debt collection and other administrative concerns regarding financing.
Dental Intelligence: Your Solution to Dental Financing for Patients
At Dental Intelligence, we offer dental patient financing for practices. These plans have an easy application process for patients and will offer them multiple options, so patients can choose the one that best fits their budget. To learn more, visit the Dental Intelligence website and request a free demo today!