When To Use Third-Party Financing – and When Not To
Most practices that I work with prefer to use in-house, no-interest financing arrangements with their patients, but also offer the option of third-party financing. If your practice falls into this category, I recommend re-evaluating the way in which you present your financing options.
The TC’s primary objective when presenting fees should be to eliminate obstacles to saying “yes”. That said, including a presentation on third-party financing as part of your payment options is an unnecessary and largely irrelevant issue for the great majority of your patients; it unnecessarily complicates the buying decision. The reason is simple: most people would prefer to avoid finance charges, if possible, when paying for treatment. Therefore, the only logical situation in which third-party financing would be attractive to a patient would be when your in-house financing terms are deemed to be unaffordable. This position needs to be established before third-party financing becomes a viable part of the discussion.
My advice is this: leave your third-party financing option off of your fee presentation sheet altogether, and only present it defensively (as you will see in a moment). Instead, only present your in-house financing options first. I recommend three: payment-in-full with discount, a high-down-payment option in the $1500 range, and a low-down-payment option in the $500 range. Most people will find one of these three to be attractive. If they don’t, they will say so – and if that happens, this is when third-party financing may have merit.
To determine if it does, the process to follow here is to have the TC first ask appropriate probing questions when the patient voices a concern. “What concerns you about our fees; is It the down-payment, the monthly payments, or both?” Once the patient has replied, the next question should be “what financing arrangements would work for your budget?”
The patient’s answer will tell you what to do next. If the gap between what your TC initially offered and what the patient wants is not significant, extending payments a few months (or splitting the down payment over two months) will probably address the concern. However, if the gap is significant – i.e. “I don’t want to put anything down and pay $100 a month” – now, and only now, does third-party become an option – in fact, in a case like this, it is the only option.
The point here is that the best way to negotiate financing options lies in first finding out what the patient wants; knowing this will let you know when third-party financing makes sense for the patient’s budgetary needs.
