Delaying dental work is not the wisest course of action. Given enough time, dental issues will pave the way for additional health issues. The best move is to schedule the procedure and come up with a way to cover the costs. Many people find that securing a dental loan is the most practical solution. Here are some of the basics that you need to know about these loans, including why they could be the right option for you.
What is a Dental Loan?
A dental loan is a lending arrangement in which the lender provides the funds needed to cover the cost of a dental procedure. Like many other loan types, the terms and conditions specify rates of interest that apply, a repayment schedule, and information about any fees or additional charges that apply. Once approved, the funds are forwarded to the dental practice where your procedure will be managed.
Can I Get This Type of Loan From Any Lender?
Not all lenders provide these types of loans. It’s not unusual for medical loan lenders to include dental loans in their offerings. There are also lenders who specialize in dental loans. By and large, you will do better to work with a niche lender who offers this specific loan type. The process is typically easier to manage from the time you submit the application until you settle the debt in full.
Can I Use a Dental Loan to Pay for Procedures Not Covered by My Dental Insurance?
You have dental insurance, but the type of procedure needed is not covered in the policy terms and conditions. The good news is that the funds from a dental loan can be used to cover any type of dental procedure. The only restriction is that the work must be done by a dental professional who is considered part of the lender’s network.
Is the Application Process Lengthy?
While the application process will vary slightly between one lender and another, most seek to make the process as transparent and simplistic as possible. In most cases, you will need to provide basic information that confirms your identity, your permanent place of residence, work and income information, and a few other bits of basic data. It’s not unusual for lenders to review the information and have a response within two business days.
My Credit is Not the Best. Can I Qualify for a Dental Loan?
Less than perfect credit will no automatically disqualify you from receiving a loan. Most lenders to have basic qualifications that applicants must meet. That does include a minimum credit score. There’s also likely to be a requirement in terms of a minimum amount of monthly income. Unless your score is extremely low or you don’t have enough income to qualify, there’s still a good chance of being approved.
I’m Currently Seeking Bankruptcy Protection. Do I Have a Chance of Being Approved?
Bankruptcy actions do impact the potential for being approved. The type of bankruptcy protection you’re pursuing and whether or not the court has discharged the bankruptcy will make a difference.
If you’re pursuing a Chapter 7 bankruptcy, most lenders will not consider your application until the court has discharged your debt and the case is settled in full. Some may want you to wait a few months, since your credit rating will likely be a few points higher by then.
Patients who’ve sought and received a Chapter 13 bankruptcy repay all of most of their debts by remitting a series of payments to the bankruptcy court over a period of between three to five years. Until the bankruptcy is discharged at the end of the repayment period, most lenders will not consider you eligible for a dental loan.
Keep in mind that Chapter 13 debtors are often prohibited from taking on additional debt without the express permission of the bankruptcy court. Depending on the regulations that apply in your jurisdiction, seeking a loan for dental work would not be allowed. This is true even if you were to find a lender willing to extend some type of dental loan.
Is This Approach a Better Fit Than Other Financing Approaches?
There are multiple dental financing options that you may consider. If your credit is good, your local bank may provide an unsecured loan or a loan that utilizes some asset as collateral. Keep in mind the interest rate and repayment terms may or may not be as competitive as the conditions related to a dental loan.
There are also medical credit card accounts that you could secure. Some of them come with an annual fee. While they’re convenient, the interest rate applied to the current balance may be higher than the rate supplied by a dental loan lender. That would mean you end up paying more, depending on how long it takes to retire the debt.
If you have a relative or other loved one who is willing to provide a personal loan, keep in mind that this type of arrangement has the potential to damage the relationship. This is true even if you honor the repayment plan to the letter. By contrast, working with a professional lender ensures that the arrangement does not have any impact on your personal relationships.
From more than one vantage point, seeking a dental loan makes sense. You’re likely to enjoy competitive rates and terms, avoid some of the fees that might apply if you finance using a credit card, and will certainly eliminate the possibility of awkward situations between you and a loved one.
Will I Need to Provide Some Type of Down Payment?
If you apply for a dental loan, be prepared to provide some type of down payment. This is true even if you have excellent credit. This is one of the ways that the lender reduces the risk of providing the loan to you.
That down payment is also helpful for you. There’s less of the dental charges to finance. That could mean that a shorter loan term will work for you. It also increases the odds that the loan payments will fit into your household budget with greater ease.
Will the Interest Rate Be Reasonable?
When people hear about niche loans, they automatically assume that the interest rates on those loans will be higher. That may or may not be the case. A lot depends on your present financial situation.
If you have reasonably good credit, a low debt to income ratio, and your track record with managing debt is good, you’re likely to be offered a better rate of interest. When your credit score is barely good enough to qualify, your income is just over the minimum, and you have other debt that consumes a significant amount of that income, expect any loan offer to come with a higher rate of interest.
How Long Do I Have to Pay Off the Loan?
Many lenders offer dental loans with terms ranging from six months to two years. A few may offer longer terms, depending on the amount that you need to borrow.
What Happens if I Pay Off the Balance Sooner?
Reading the loan terms and conditions is the only way to identify all possible fees and charges. One that you want to look for in particular has to do with retiring the loan balance early. Some lenders will assess a fee or penalty if you pay off the debt ahead of time. Others will not impose any type of fee at all. Ideally, you will want to work with a lender who does not charge any fees for early repayment.
Do you have other questions about dental loans? Write them down and arrange to talk with a loan representative. Once you have answers to these and other questions, it will be easier to decide which lender is the right fit for you.