Buying Medical Procedures On Credit
Posted on August 30, 2007
Medical expenses can be one of the biggest unexpected expenses out there. Often times they come at the worst times and need to be completed out of shear necessity. Other times they are cosmetic procedures that people feel are necessary and will improve their general well being. Whatever the case is the majority of medical procedures can be financed directly through the dentists’ or doctors’ office. Medical consumer lending is one of the fastest growing segments of consumer credit according to the NY Times:
For $3,500 laser eye surgery, $6,000 ceramic tooth implants or other procedures not typically covered by insurance, millions of consumers have arranged financing through more than 100,000 doctors and dentists that offer a year or more of interest-free monthly payments. Of course, going into debt to pay for medical procedures is nothing new for many people. And this type of financing is still only a fraction of the nation’s $900 billion market for consumer revolving credit. But as the price of health care continues to rise and big lenders pursue new areas for growth, this type of medical financing has become one of the fastest-growing parts of consumer credit, led by lending giants like Capital One and Citigroup and the CareCredit unit of General Electric.
Typically the lending works much the same way a credit card would work. There is an introductory offer of 12 months at zero percent financing then the interest rate jumps to around twenty percent. If a payment is missed or the loan goes into default the interest rate also spikes. There are other loan options as well including fixed terms with an interest rate typically around 12% to 13%. The loans can be used variety of medical and dental procedures:
- LASIK Surgery
- Chiropractic
- Fertility treatments
- Weight loss
- Hair Restoration
- Botox
- Skin treatments
- Laser hair removal
- Cosmetic surgery
- Hearing aids
- Veterinary medicine
Medical expenses can be costly and many times people cannot afford to pay the entire balance. However, there are some preventative steps one can take to avoid having to go into debt when visiting the dentist or doctor office:
- Emergency fund. Often times you hear this preached over and over again on other personal finance blogs. It is one of the most important yet overlooked concepts. If the short term savings are not present to pay for unexpected expenses then the root of the problem of going into debt for medical expenses will be reoccurring.
- Ensure you can afford the loan. If you decide for your personal situation taking out a loan with the dentist or doctor is the best choice then ensure you are capable of meeting the terms. Defaulting on medical loans, similar to credit cards can be very costly.
- Know your insurance plan. Understand the terms of your insurance including what is covered and what is not. Going over your insurance limits can be very costly. Often times insurance will have a yearly max it will pay out. If you can wait until the next year to do a procedure, consider postponing until insurance will cover it.
- Use Your Health Savings Account (HSA). It takes some planning but HSAs can help cut the cost of medical expenses by using pretax money.
Related Posts
HOWTO: Flexible Spending Accounts (FSA) DeconstructedThe Art of Resisting an Impulse Purchase6 Ways to Save on Prescription Drugs» Filed Under Credit Cards, Unexpected Expenses
Comments
2 Responses to “Buying Medical Procedures On Credit”
Leave a Reply
Great post!
Part of my Lasik was funded via finacing…The procedure was $5600 and I financed $2000 because of the “want it now” mentality…However I negotiated with the lender a 18 month interest free loan based on my good credit score…
That is te key to any financing…and another item to add to your post…”Don’t be afraid to negotiate”. The worse they can say is no.
Also you HAVE to maintain a good creit score…the worse your score the less flexibility you will have and the more you will pay in finance charges.
I will all this covered by insurance companies and not to have to get a loan for medical procedures.