In the U.S., the dental care industry is valued at a whopping $156.4 bl in 2021 and expects to grow another 7.5%. Although a considerable market, dental clinics are fighting tooth and nail to get a piece of the seemingly gigantic pie.
There are two main struggles for dental clinics. The first struggle is staying competitive. With dental costs constantly fluctuating for almost any dental procedure, it's getting challenging to hit the right price to attract customers without sacrificing revenue.
The second struggle ties right to the first one. The cost barrier is a significant issue both for dentists and patients. This is especially noticeable when you consider that a staggering 80% of Americans will delay a regular dental appointment even when knowing it will cost them more in the future.
This sets up the playing field for almost every private dental clinic. How to make your dental work more accessible without crippling your profits? One solution that some dental clinics are using is flexible dental financing options.
But there are countless third-party lenders out there, and as a dental office, you need to ensure you pick the right one. If you go with a lender that doesn't care about your needs and the needs of your patients, it can end up hurting your reputation and lower your patient number.
On the other hand, external dental loans are a great way to make your dental work accessible and attract more customers. This article aims to help you out with picking the dental loan company in 2021. But first, let's start by explaining what dental financing is.
What is Dental Financing & Dental Loans?
Dental financing is a payment alternative that you offer to customers that can't pay for dental care at once. It adds flexibility since patients can afford all kinds of dental services without paying upfront, including:
- Conservative dental care such as teeth fillings.
- Urgent dental care such as teeth fractures or tooth abscesses.
- Endodontics such as root canals.
- Optional dental procedures such as cosmetic dentistry.
- Orthodontics such as braces.
Customers can pay you in installments such as monthly payments, most commonly with interest rates.
Sometimes it's compared to credit cards. Credit card amounts usually limit to low to mid-tier purchases. But, unlike credit cards, there isn't a specified limit with dental loans.
Like general consumer financing, the loan amount and loan terms are susceptible to the client's credit score. A bad credit score often means a smaller loan amount or even loan rejection.
But, a flexible dental financing program opens the doors both for the dental business and patients, and it's usually the best dental financing option.
Another benefit is that the lender does all the work for you, such as checking the client's credit score and handling loan offers. If the loan purpose is acceptable and the borrower gets a green light, the customer usually pays a certain amount in front as an origination fee. After, customers pay their dental loans in monthly payments.
As such, consumer financing options, in general, are an excellent alternative for costly services. Often a patient can afford dental care, but they can't pay upfront. Without offering dental loans, dentists commonly miss out on a healthy market chunk.
How to Offer Dental Loans?
Usually, there are two routes dentists can take. The first route is to have an internal loan program, meaning the clinic handles loans. This can be time-consuming and stressful since the dentist manages finance alongside their usual dental care responsibilities. Considering the required knowledge and legal work, the better option is to go with external financing options.
Third-party lenders handle external financing options for you. That includes:
- Managing the loan application and administration that comes with it.
- Ensuring the client pays off the loan. Keep in mind that you, as the dentist, don't wait for the customer to pay off the loan to get your payment.
- Managing the legal work and ensuring that everything ends with zero complications.
It doesn't matter what kind of dental work you do. Dentists who do necessary care, such as root canals, and dentists specializing in cosmetic dentistry, can offer dental loans. Your clinic can continue its everyday work and focus on increasing patients that visit your clinic. There are a handful of other benefits that we will explore next.
External Dental Financing Benefits
There are two benefit categories—benefits for you as the service provider and benefits for your customers. Since the average customer is usually unaware of paying for dental care in monthly payments, knowing both benefit categories is helpful. That way, you can promote your business better and increase your customer acquisition. Let's start with business benefits.
Business Benefit #1: Increase Sales
The first benefit goes back to what we talked about earlier. Your dental clinic gets paid upfront, and after you finish offering services, you're out. The rest of the financial procedure is solely between the lender and the customer.
The obvious advantage is that you get the money right away. But arguably, an even more significant benefit is time. By offering flexible dental loans via a 3rd party lender, you can jump from helping one patient to another and increase sales. Furthermore, by providing the customer more than one payment option, the potential customer's likelihood of becoming a paying customer rises dramatically.
Business Benefit #2: Increase Customer Retention
As a dentist, you know that dental costs can quickly stack up. You also understand that customers are likely to return or that a simple office visit can soon turn into a complex dental procedure.
A patient usually isn't ready when they come for the initial check-up. While most will likely pay for the office visit upfront, it often doesn't end up there.
Depending on the teeth' health, you might have to fix a single tooth or even do root canals for multiple teeth. With the average visit cost between $50-$350, standard teeth cleaning cost between $70 -$200, and the average cost for root canals between $300-$2,000, customers quickly get the price tag scare. What they thought (or hoped) would cost a maximum of $350 can turn four-figure.
This results in one-time customers who aren't ready to pay large figures. But by offering a personal loan for dental procedures, it becomes easier to turn a one-time customer into a returning customer and thus increase your customer retention.
Business Benefit #3: Increase Loyalty & Referrals
A returning customer means a happy and loyal customer. More importantly, a loyal customer doesn't stop to benefit you once they pay their dental costs.
Think about it. If a customer is satisfied with your work and flexible payment options, and the possibility of a dental loan, what will they do when a friend comes complaining about a hot tooth?
Naturally, they will refer your dental care. This is arguably the biggest benefit since referral can increase sales drastically with you lifting a single finger besides ensuring top-quality dental services.
Now, let's move to customer benefits.
Customer Benefit #1: Payment Alternative
According to the research for North America, a credit card is still the most commonly used payment method with 34% usage. But, this will likely change in the upcoming years, with eWallets overthrowing credit cards for the top.
First, what does this mean for you? It means that even if you're content with the current customers (willing to pay with credit cards), the likelihood of the tides turning in the near future increases.
By offering a payment alternative, customers get the option to adjust their buying habits, and you can be the first one awaiting them with open doors.
Customer Benefit #2: Buy More
Alternatives such as buy now, pay later had an almost 50% increase between 2020 and 2021. One reason is a bad credit score and inability to buy with a credit card or another payment option. The second reason is buying more even if the customer isn't struggling with a bad credit score.
When it comes to dental work, this usually means that the customer can afford dental procedures that aren't urgent but are beneficial nevertheless.
In the cosmetic dental industry, having the possibility of a monthly payment and a loan means that the patient can afford to improve even the most negligible dental uncertainties.
Customer Benefit #3: Feel Safer & Credit Score Issues
Having an empty wallet when a customer has an urgent dental issue, it's never a good feeling. Most medical insurance plans have extremely low-cap approved limits. Meaning, after a certain amount, the patient needs to cover the additional fees. This often forces the patient to take unpleasant financial routes.
But by knowing that they can get a dental loan outside the insurance plan directly from you, they will feel safer.
In the worst-case scenario where the patient has a bad credit score, fear can easily overcome the patient's rational judgment. In a way, you can offer dental care and peace of mind to your customers.
Deciding on the Right Dental Financing Company
Now that you know the benefits of providing dental loans through a third-party lender, it's time to dig into choosing the right dental financing provider for you.
First of all, you're likely wondering how much does a financing company costs you. Depending on the financing company, you usually don't have to pay anything since the lender gets their profit via interest rates and sometimes by charging the origination fee. But some financing providers do charge a small one-time fee.
If you market your dental financing correctly, the fees are often of little to no concern since you're increasing sales. So instead of focusing on possible fees, it's better to pinpoint a dental finance lender that is right for you and your customers.
Here are some tips to help you pick the best dental financing provider with suitable dental financing options for you.
Dedicated Dental Loan Service
Many loan providers go with a standard template no matter the business they partner with. In a way, some providers fail to see a difference even between student loans and dental loans.
When you first start looking for a provider, you need to know them better. You can do that in two steps.
- The first step is to do online research either on the company's website and/or websites that provide company information if you can find general personal loan information instead of specifics on dental financing, that likely means that the provider doesn't go outside generic loan terms with a generic origination fee and interest.
- If you find information on the lender providing a dental loan service, the second step is directly contacting the provider. This way, you can test the waters and find out if they can back up what they say on the website.
Find a dedicated dental loan company is crucial because that way, you're partnering with someone who can offer financing options specific to dental procedures.
Remember, you're looking to benefit yourself and your customers. Although a generic lender might help you, it can have a completely different effect on your patient. The result? A one-time customer who never comes back.
Smooth Online Application Process
The following vital element to look out for is a smooth online application process. You can quickly lose a patient in complex approval procedures that take days to qualify. Furthermore, it's critical to have an online option in current times.
Keep in mind that it's also not all about how fast your customer's account is approved. Some providers can have a quick and affordable procedure, but that must not come at the cost of bad credit score research.
If a customer is in a genuinely bad financial situation, it doesn't matter how flexible you are with a loan and its monthly payments. If a customer can't afford it, they usually end up deeper in debt, which can also negatively reflect on your reputation. Customers fighting heated financial battles will usually blame the dental office even though you have nothing to do with the issue.
So when having the initial meeting with the company, be sure to check how smooth (and thorough) their loan applications are.
Large Amount Financing Capability
The total cost for some dental procedures can increase pretty quickly. It can go up to a point where the dental financing company struggles with providing the credit without any delays.
Although financing providers handle finance, that doesn't mean that each one can handle larger amounts with no delays.
This element can have a negative impact both on you and your patient. Until you get the funding approved, you're less likely to do your dental work services. The patient has to wait, which can be unpleasant, whether cosmetic dental services, braces, or urgent dental health issues.
This can result in customer loss and a bad reputation for your dental work services.
Lenders with Low-Interest Rates
Although it doesn't directly matter what the interest rate is, it does to your customer. They might need a loan to get their teeth fixed, but that doesn't mean that the customer will go with the first personal loan plan that shows up.
Everybody knows that a high interest rate can result in significant debt. This goes back to you as a dentist getting blamed for the debt.
Although interest rates need to exist, some lenders can get greedy and exploit each account as much as possible. Make sure to inform yourself and how flexible the provider is.
Efficient Customer Account Management
There are plenty of moving parts when it comes to dental financing loans, such as:
- Monthly payments
- Credit score
- Loan amount
- Loan terms
- Account information
- Loan success pay-off rate
- Additional fees
For lenders offering quality financial services, they need a strong account management network. It doesn't matter if they handle a single personal loan per week or are checking 1,000 accounts per day.
Lenders with weak account management get lost quickly. And the last thing you want is a lender who can't carry their financial weight.
This can not only result in legal issues for you but also a bad customer experience.
If you end up finding a lender who checks all of the above, you can ensure to reap the benefits of a flexible financing program. An excellent financing company can handle any loan amount and puts their clients in the first place.
Offer Top-Of-The-Line Dental Financing
Dental financing options are becoming more and more relevant for any dentist who wants to stay competitive in the dentistry market.
Since people worldwide are getting reluctant with their spending, you need to adjust to the needs and capabilities. Credit card payments are still the go-to option for some people. Still, generic payment options are losing appeal since companies focus on credit scores while ignoring other financial customer capabilities.
With Time Investment Company, either you or the patient doesn't have to settle for anything less than what you need. TIC thrives in providing flexible financing options to dental clinics by delivering the most affordable options to the clinic's customers.
Do not hesitate to schedule a call and ask whatever you want to know. We know how crucial it is to have a straightforward and genuine relationship with clients. We're here to offer the best patient finance services that you can find.