Wednesday, June 23, 2010
Help Me Howard: Dental Issue
If you need dental work or plastic surgery, it can be expensive, which is why many people take out medical loans. Borrowers may think it's no interest, but as one South Florida man discovered, it was very expensive. Why? Let's bring in Help Me Howard with Patrick Fraser.
WSVN -- Shelly Rechtmann was born in China. And when you come to her home, expect some of China's finest teas.
Pouring the tea for her family and friends makes her happy. But until recently, Shelly worked hard to hide her smile.
Howard Rechtmann: "Her teeth were all yellow, and the enamel was wearing down."
Dentists told Shelly, she needed new crowns. So Howard checked around to find out how much they would cost.
Howard Rechtmann: "Every place we went was over $20,000, $25,000, $30,000, $40,000."
But the dentist who wanted $40,000 for the work offered to finance it through a bank.
Howard Rechtmann: "It was two years, zero interest, and the payments seemed reasonable."
Howard agreed, assuming the dentist was going to get the $40,000. Shelly's crowns turned out great. But during a checkup, Howard learned something that nearly made him grind his teeth.
Howard Rechtmann: "One of the dental office people came up to us and said, 'Did you know we only received $33,000?' And I go, 'What are you talking about?'"
Turns out the bank that financed the $40,000 no-interest loan kept $7,000 as their fee.
Howard Rechtmann: "To me, that $7,000 represents the interest the bank got on the zero-interest loan."
Howard immediately called the bank to complain.
Howard Rechtmann: "And they told me on the phone, basically, that it was none of my business."
Howard says, the bank employee told him their fee was between the dentist and the bank. But Howard says, he wishes he had known what was going on.
Howard Rechtmann: "This is supposed to be a zero-interest loan. The whole fact that this was not disclosed is the main issue. It made me feel that I was tricked."
Well Howard, do the Rechtmanns have a right to know the details of their loan?
Howard Finkelstein: "The Truth in Lending Act requires full disclosures in loans, but the law has a loophole. If the dentist says that he did $40,000 worth of work, then the law considers the $7,000 a payment from the dentist and not the Rechtmanns, even though they are the ones who will have to pay it back."
The bank told us, the dentist offered to pay the $7,000 fee to guarantee that he would be paid for his work. The bank reiterated that Shelly got $40,000 worth of dental work, that the $7,000 fee came out of the dentist's pocket. The dentist's office told us, the Rechtmanns were aware that the bank was being paid a fee. They say, they were not told. And the Rechtmanns want to know if they can get their $7,000 back.
Howard Finkelstein: "No, he probably will not get that money back. And to avoid this happening to you, shop around with other doctors, dentists, even lenders. Negotiate. Ask the person doing the medical work, point blank, are they paying a fee. In other words, keep asking questions."
Shelly Rechtmann: "It looks good."
Howard and Shelly are happy with her teeth but not the lending process that made them happen.
Howard Rechtmann: "First, you have the pain from the procedure. Then, you have the pain in the wallet."
Patrick Fraser: "Those medical loans for dental work or plastic surgery can make you look good. But financially, they can make you feel bad. So be careful. For example, Howard's loan is no-interest if he pays it off in two years. After that, the interest rate jumps to 22 percent. It's expensive to look good. I'll save my money and stay ugly."
Frustrations left you frowning? Ready to start smiling again? Let us chew on it. We don't do surgery, but a little cut and paste from the law books will hopefully make you a little happier.