I know doctors, sometimes better than they know themselves.
That is, at least when it comes to their financing needs.
As President of the Lending Division at Bankers Healthcare Group, I speak with healthcare professionals every day about funding. You see, a doctor, really most healthcare professionals, have unique needs and expectations that are dramatically different than other types of borrowers.
Understanding those differences are essential to locking in the right loan.
What are Fintechs?
Today, physicians, like most of us, are inundated with ads from so-called “financial technology,” or “fintech,” companies pitching low-interest-rate loans (but often little else, so make sure to read the fine print).
Fintechs first emerged about a decade ago as mostly third-party vendors providing digital solutions for the back offices in banks and brokerages. Since then the market for fintech has exploded online, especially in the areas of personal and commercial finance. Make no mistake, though, the term “fintech” covers a wide range of company types and the waters can get quite murky.
So, whether you are a doctor or dentist, pharmacist, radiologist, or physical therapist, here are five ways to tell whether or not a fintech lender is right for you.
1. Physicians’ Funding Needs are Different From Other Borrowers
Today, not only is the average medical-school debt $190,000, but nearly half, or 46 percent, of physicians ages 35-49 are still paying off that debt.
When compared to other types of consumers, that’s a significantly long time to be paying down what is likely still a substantial amount of debt.
Moreover, healthcare professionals have unique types of funding needs as their careers progress. A doctor or dentist may want to consolidate debt, such as student loans and credit cards, to get a lower interest rate. Or, perhaps that individual leads a practice and needs to purchase new medical equipment, hire more staff, expand a facility, or purchase another practice.
Fintech lenders often do not specialize in a specific industry or vertical, and if they do, well, they don’t go very deep.
Healthcare professionals often need a lender who understands their funding needs now, as well as later, to help them structure their financing in a way that makes the most sense.
2. Healthcare Pros Need More Than Money, They Need Flexibility
Sure, some fintechs may tout a relatively quick turn-around on the loan application, but when you dig in deeper to see exactly what you’re getting as part of the loan arrangement, they often fall apart.
In fact, according to a survey conducted by the American Bank Association on non-bank online lenders found that 19 percent of borrowers reported being unhappy with their repayment terms and 33 percent complaining about unfavorable interest rates, such as an adjustable rate.
For instance, the savings you get up front really may not matter if you cannot get the full amount you need. Also, if you take out a loan with an adjustable interest rate, at some point that rate can be bumped higher. Even if you are in a position to pay off the loan early, you’d likely face pre-payment penalties.
Moreover, a fintech lender may often limit the term of the loan, and a shorter term means you may be paying a higher monthly cost than you really want to manage.
3. Medical Professional Don’t Save and Spend Like Other Borrowers
Healthcare professionals, in general, tend to be well-compensated. However, they often spend more than other types of borrowers, incurring more debt on paper.
In setting the terms of a loan, lenders often look at debt-to-income (DTI) ratio, which is the borrower’s monthly debt payments over gross monthly income. As a medical professional, this is a valuable number to keep in mind.
However, just looking DTI does not show the full picture of a type of borrower who can absorb much more debt than others.
4. Doctors Don’t Have Time to Shop Around
It’s no secret that healthcare professionals are extremely hard-pressed for time. They simply do not have the availability to shop around for a loan, supply multiple statements and records, engage negotiations, arrange appraisals, and all the other tedium that many lenders require.
Although fintech companies may seem attractive, very few actually specialize and cater to the needs and expectations of healthcare professionals. When shopping around, it’s important to work with a lender that understands your personal, professional, and practices needs, something we at Bankers Healthcare Group are proud to specialize in.
Ultimately, don’t be laser-focused on the rate. There are better options available to more conveniently secure a loan, structured with terms that make more sense for your situation.
5. BOTTOM LINE: Don’t Follow the Crowd, YOU are Not Like THEM
The thing with fintechs is they often invest heavily in marketing to build buzz. It’s no wonder why they do this, because it works.
Yet, just because a fintech lender had a Super Bowl ad doesn’t make them a good fit to meet your financing needs. So, a friend or family member may have used one of these lenders, or be the friend of a friend of a friend who used these lenders. But, if they’re not a healthcare professional like you, they probably have much different financing needs.
In my experience, an investment in marketing is never a substitute for an investment in experience and specialization. I know doctors and I know they’re all about quality service and convenience. Unfortunately, that is not what many of these fintechs are selling.
DISCOVER MORE OPTIONS – CONTACT BANKERS HEALTHCARE GROUP TODAY!
Zach Raus is President of BHG’s Lending Division. He is an expert on financing for physicians and healthcare professionals. To discuss this article and speak with Zach and his team, please contact firstname.lastname@example.org.