P2P giant Lending Club has introduced a product providing no-interest financing for elective medical procedures. Offered through its subsidiary Springstone, the loans have a financing period of between six months and two years depending on the borrower’s health care plan.
Borrowers make equal monthly payments of an amount which eliminates the balance before interest begins to be charged. Should a balance remain at the end of the interest-free period, interest based on a variable Prime Rate index begins to accrue at that point. Lending Club and Springstone stress this product differs from most deferred-interest products in it does not charge retroactive interest on the entire amount borrowed, even though much of it may have been paid off.
“Many consumer advocacy groups and the Consumer Financial Protection Bureau have raised questions about deferred-interest products in patient financing and we’re proud to lead the way in delivering a more consumer-friendly alternative that we believe provides enhanced transparency for borrowers,” Lending Club CEO Renaud Laplanche said.
The product launch coincides with several new policies aimed at clarifying the patient’s knowledge level of financing options available to them. They include a three-day “consideration period” during which dental customers can get a full refund when a provider’s office applies on their behalf for a loan in excess of $1,000. Charged services must also begin within 30 days.