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Updated on Thursday, December 13, 2018
First impressions are lasting impressions. So if you’re self-conscious about your smile, or you’re in need of dental work to resolve a health issue, you may be considering a dental loan. A dental loan is basically a personal loan you can take out to cover dental work.
In this post, we’ll discuss dental loans and other methods for financing your trip to the dentist, plus the pros and cons of borrowing money.
Financing your dental work with a personal loan
Dental coverage may be part of your health plan or purchased as a stand-alone plan — but what’s covered by insurance varies.
Annual check-ups and cleanings may be covered in full, along with preventative maintenance. Fillings, crowns and orthodontic services can have out-of-pocket costs. Elective cosmetic dental work like veneers may not be covered at all — and veneers can cost a staggering $500 to $2,000 (or more) per tooth.
If you can’t afford out-of-pocket costs, a personal loan may be used to cover the expense. The process of using a personal loan for dental work is pretty straightforward. You apply for a personal loan; once approved, you use the funds to pay your dental bills. Afterward, you make installment payments on the loan until it’s paid off. If you’re considering a loan for dental work, here are the pros and cons:
- The speed. A personal loan may get you the cash you need fairly quickly. This will be helpful if you want to get dental work done within the next few months. The application process for a loan — especially if you get that loan online — can take just a few business days.
- The fixed term and predictable costs. Personal loans are installment loans that have a set interest rate and set loan term. You’ll know exactly when the loan will be paid off.
- The options. There are personal loans for borrowers with excellent credit and not-so-good credit. There are short-term loans of 12 months and long-term loans of up to 84 months. Check out a sampling of the personal loans available below.
- You’ll have another debt payment. Personal loans can be an affordable debt vehicle, but debt is still debt. If your dental work is a voluntary cosmetic procedure, you need to decide whether it’s worth the additional financial responsibility. There may also be upfront fees to take into consideration depending on the lender you choose. Upfront origination fees to process the loan can range from 1.00% to 8.00%.
- Loans offer a set amount of cash. A personal loan gives you cash in one lump sum — so you could be out of luck if the dental work ends up costing more than your loan. In this case, you may need to pay some in cash, borrow more money or charge the balance to a credit card.
- Higher rates for lower credit scores. You may be able to qualify for a loan will less-than-stellar credit, but the increased credit risk could increase your interest rate and fees. Shop around with multiple lenders locally and online to see where you can get your best deal.
How to get a personal loan
You should explore all options at local banks, credit unions, and online lenders when shopping for a loan. Financial institutions that you already have a relationship with may be able to offer you a competitive rate. The online lending marketplace is booming, too; many online lenders are offering low rates and easy online application processes.
LendingTree’s personal loan tool may be able to match you with personal loan products from up to five different lenders or online lending platforms based on your creditwortiness. Check out a few of the products available below:
4 alternatives to a dental loan
Personal loans aren’t the only way to pay for dental work. Here are a few alternatives along with the pros and the cons of each:
Use a credit card
Credit cards are one of the most common ways to borrow cash when you’re in need of funds. You can apply for credit cards on the card issuer’s website. Some credit card issuers even allow you to pre-qualify with a soft inquiry that doesn’t affect your score.
- Credit cards can have introductory deals and special member rewards offers. Some credit cards offer 0% APR on purchases as an introductory deal. You can technically borrow money interest free if you can charge dental work to the card and pay if off before the intro period ends. There are also credit cards with sign-up bonuses that may reward you for spending.
- You can use and pay back cash as needed. Credit cards offer a bit of flexibility. If your dental work costs more or less than what you expected, you can use what you need up to the credit limit.
- Credit cards may have a higher interest rate than a dental loan. The average credit card interest rate is 14.38%, according to the Fed’s most recent data, but credit card interest rates can go beyond 20%, depending on your credit score.
- You may not qualify for a 0% rate. Introductory 0% APR deals are only available for a limited time. Your rate jumps up to the standard rate after the period ends.
- You can get caught in the minimum payment trap. Credit cards are not like personal loans, where you have a structured repayment schedule. Instead, there’s a minimum payment you have to make that’s likely a fraction of your balance. Debt can spiral out of control if you get into the habit of making just minimum payments. Be sure to develop a strategy to pay off the credit card otherwise the debt can linger.
Try a health care credit card or dental office payment plan
Health care financing options such as CareCredit and iCare Financial help patients cover out-of-pocket costs for dental and medical procedures. These financing options may be recommended to you by dental offices if you’re not able to pay for the procedure upfront. Dental offices themselves may also offer payment plans where you pay incrementally until the bill is paid off.
- Credit check may not be required. Some financing products don’t have credit checks and have quick approval processes.
- 0% introductory financing terms. Products like CareCredit offer promotional financing with no interest if you pay off the debt in 6, 12, 18 or 24 months.
- Fees. There may be down payment, administrative fees and application fees involved.
- The possible deferred interest. Be careful to read the fine print of any financing product pamphlet you get from a dental office. Financing options that have low interest starting out may have a deferred interest policy. This means that you get charged retroactive interest from the initial transaction date if you don’t pay off the balance within the low interest period.
Borrow from your home equity
If you have sufficient equity in a home, you may be able to tap into the home equity to pay for your dental work.
- You have options when borrowing from home equity. One option is the home equity loan which gives you a lump sum that you pay back in installments. If you prefer a credit line, the home equity line of credit (HELOC) gives you an account that you can draw money from when you need it. LendingTree, which owns MagnifyMoney, has a marketplace where you can shop for HELOCs and home equity loans.
- A better interest rate may be possible. Home equity loans and HELOCs are backed by your home. The collateral securing the loan may be able to land you a better interest rate compared to an unsecured personal loan.
- The fees and interest. Lenders may charge draw fees when borrowing from home equity. HELOCs can also have a variable interest rate. Shop around for products with the most competitive rates and fees. Talk to your lender about rate caps and if there’s a way to lock in your rate.
- The consequences of nonpayment. You could lose your home if you’re unable to pay back the HELOC or home equity loan.
Pull from savings
You could use cash you already have or you could put away money biweekly or monthly until you have enough for the procedure. Saving in a health Flexible Spending Account (FSA) or Health Savings Account (HSA) for dental work can offer tax benefits. Learn more about the HSA and FSA.
- Using cash means no debt payment. You don’t have to worry about adding another debt payment to your budget.
- You avoid financing costs. No need to shop for interest rates or read through fine print. In some cases, offices may even give you a discount for paying upfront in cash.
- The high cost of dental work could drain your savings account. Dental work shouldn’t dry up all of your liquid savings. It’s a good idea to keep a cushion of rainy day savings in an account at all times in case you lose your job or an emergency happens.
- The timing. Saving up can take some time if your savings for dental work is currently $0. If you need to get dental work done next month, saving up the cash may not be possible.
Borrowing money for dental work is not something you should jump into without some serious thought. Can you manage another debt payment? Is dental work something that can wait?
If it can wait, saving up cash can help you avoid the costs of financing and the responsibility of managing another debt product. If it’s a procedure that cannot wait, be sure to explore all options.