No-interest loan but interest was dumped into my account after it was not fully paid off by a certain date

Submitted by RevolutionaryLion384 t3_yhh1qb in personalfinance

A Dentist's office I was having a procedure done signed me up for what they described to be a no-interest loan, however they did not explain to me that there was a date where the loan had to be fully paid off or thousands of dollars in interest would be added to my balance. I was making all of my monthly payments which were explained to me and agreed upon and I was under the impression, that as long as I made those payments I would be good. To me I feel like this is a complete scam that they would pull something like this but when I've asked other people, to my surprise they actually tell me that this is always how it works and that I should have known, almost like it is my fault. Is this really the case? I have had other loans in the past but never a no-interest loan. I feel like if a company tells you something is a no-interest loan, then it should really be no-interest

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Annabel398 t1_iudxwdm wrote

If it was CareCredit, at the bottom of the first page of each month’s statement, it literally says:

> Promotional Expiration Notice > > YOU MUST PAY EACH PROMOTIONAL BALANCE IN FULL BY ITS EXPIRATION DATE TO ABOID PAYING DEFERRED INTEREST CHARGES. PLEASE SEE THE PROMOTIONAL PURCHASE SUMMARY SECTION ON THIS STATEMENT FOR FURTHER DETAILS. YOU HAVE A PROMOTION EXPIRING ON 00/00/00.

…and on the next page it has a table showing the promo expiration date, your current promo balance, the deferred interest, the transaction date, a description, and the initial purchase date.

To be blunt, they spell out exactly what you have to do to get the 0%.

These plans are offered to help people pay for large purchases over time, and how you should use them is this:

  • Get the amount you’re financing
  • Get the number of months (“$2,000 at 0% for 12 months”)
  • Subtract 1 or 2 from the number of months.
  • Divide amount financed by the reduced number of months (let’s say $2k / 10 months = $200)
  • Pay that amount—not the “minimum payment—every month.

You reduce the months (step 3 above) to be absolutely sure that it’s paid in full before your promo rate expires.

CareCredit can be a useful tool but it’s up to you to meet the terms. The “other people” you’ve talked to are right—this is how it works. The key you probably missed was “0% for 6 (or 12 or 24) months.”

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Blah12821 t1_iudq9zv wrote

Chances are excellent you signed a contract with all of the information included. If you signed the contract without reading through it first, then, yes, it was your fault.

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DeluxeXL t1_iudovsh wrote

It's called a "deferred interest loan" or "no interest if paid in full within x months or else full retroactive interest applies". Merchants often offer this for large-ish purchases.

Did you sign or agree to anything?

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RevolutionaryLion384 OP t1_iudq7cf wrote

I only remember signing a piece of paper in which she was writing things by hand as she was explaining the payments and how long the loan was. Like I said she never explained the part about there being another date, where interest gets dumped into my account if not fully paid off. Unfortunately I did not get a copy of this paper and I have tried calling the dentist's office and carecredit to see if they still have it but they don't.

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KReddit934 t1_iudrb1d wrote

Another lesson learned is to always get a printed copy of anything you sign.

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blakeh95 t1_iudsbt2 wrote

You should have still gotten a Truth-in-Lending Act disclosure, which would have provided you with information about things like your cost of credit.

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partyongarth788 t1_iudq1eb wrote

Read the paperwork you signed. It will identify the terms. My suspicion is it offered a minimum payment, not a payoff payment and a fixed term. I agree this is a shady way of doing a loan & actually thought it had become illegal after the changes following the great recession, but i guess those rules were rescinded during the last administration. Most such loans used to not require any payments and as long as you paid it off before the due date, there was no interest BUT if you didn't the entire interest charges became due. It was a great system for me, to use someone else's money free, but a sizable percentage did not pay it on time & were stuck

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theoriginalharbinger t1_iudtuqr wrote

> during the last administration

Errrr... what? Deferred interest loan regulations haven't changed at all for consumer credit under Obama, trump, or Biden, and have long been a cornerstone of providers who issue credit on their own books.

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partyongarth788 t1_iug775s wrote

While I'm not finding a specific regulation specifically focusing on this, the zero payments until the end of the loan term, Dodd-Frank did include consumer protections that appear to have impacted such loans. Prior to Dodd Frank many firms offered zero interest zero payment options. Afterward, these same firms only offered zero interest with ongoing payments. Through the early 2000s I used to buy furniture & similar consumer products and make no payments until a month or two before the loan was due. It worked for me, but those either less financially disciplined or of lesser financial capability often found themselves owing something at the end and having to pay all the terms interest.

Much of Dodd Frank was repelled in 2018.

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93195 t1_iudqkro wrote

What you had was a deferred interest loan. No interest only if the balance is paid in full by the specified date, otherwise all the interest starting from Day 1 comes roaring back.

They’re pretty common. Always read the fine print, especially when someone is telling you “no interest”.

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nkyguy1988 t1_iudqjke wrote

It's not their job to list every single detail and fine print option. That's on you to read and fully understand before you sign. Go get your docs out and actually read them this time. I bet it worked exactly like it said it would.

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RevolutionaryLion384 OP t1_iudrqq5 wrote

They should at least mention and make sure the client is aware of such an important detail though. Especially when I had her reiterate that there was no interest on a couple of occasions because it already sounded like a too good to be true kind of thing

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nkyguy1988 t1_iuds5n1 wrote

Well, if it sounds too good to be true.....it most likely is.

Again, it's not on them to spell out every single bullet point. You signed it. You agreed to it. Period. There was no intererest. There was no interest provided you paid by a certain date. They didn't lie. You didn't understand the difference. Again, that's ultimately on you, not them.

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RevolutionaryLion384 OP t1_iudw89w wrote

I'm not saying they need to spell out every single bullet point, but to intentionally hide something that is an obvious negative like this is always shady in my opinion. They were more than happy to mention into detail all of the positive aspects but not the the negative even when I was asking questions and being somewhat skeptical during the meeting. I simply was not educated and lacked the experience in this specific situation to ask the right question and now I have to pay for it which in my opinion may not be illegal or anything, but it is fucked up

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blackjackmark t1_iueh5b3 wrote

I understand and agree that it would have been nice of them to mention this when you signed up, but are you saying your monthly statement hasn’t mentioned this for the past 6/12/24 months (or however long the interest free period was for)?

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RevolutionaryLion384 OP t1_iufzs4q wrote

My statements were online and to be honest I tend to forget things once they are handled or dealt with in a certain way. It actually dawned on me at some point where I asked myself why I was even still making payments, because it should have been paid off and that's when I looked at my account and began to figure out what was going on

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blackjackmark t1_iug297z wrote

I totally get that as I tend to do similarly…but it’s certainly a “lesson learned” to be sure to check your statements at least occasionally! Depending on how long ago the grace period ended (and you have the funds), it might be worth a shot to call and ask them that if you paid it off in full immediately would they waive the accrued interest. No harm if they say no.

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RevolutionaryLion384 OP t1_iuggefc wrote

And lessons are important, I don't mind that, but I'd prefer not to have to learn $2000 lessons of which a billion dollar company gets to profit on within a trillion dollar industry. Something about that just doesn't sit right with me and I know I'm not the only that this has happened too.

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Trick-Read-3982 t1_iugtmh8 wrote

Hard, expensive lesson but ALWAYs review your statement and paperwork that you sign. Sorry you had to learn this way.

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Admirable_Two2579 t1_iudp08a wrote

Yup, did you read the fine print?

It happened to me when I was learning about credit and credit cards, so if you don’t pay it off within their timeframe,. They will dump all the $$, and that’s how they get you.

So next time ask questions about the timeframes and if not paid within a certain time especially if you are only making the small payments like I was… ✌🏼

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doubagilga t1_iue82ye wrote

This is how every single such no interest payment plan works. It was written on the paperwork you sign and likely every monthly statement. Rather than read, you’re complaining that it was not read to you.

You have my pity but you are 100% in the wrong.

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BogBabe t1_iueertj wrote

The only circumstance under which I would disagree with you is if this payment plan was brought up and explained and signed immediately after the dental work as OP was still recovering from a general anesthesia. It would be highly unethical, IMO, if that happened, but I would hazard a guess that the zero-interest financing plan was discussed and agreed to before the work was done.

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doubagilga t1_iuemqzs wrote

It would not be just unethical, it would be illegal.

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BogBabe t1_iufcrva wrote

That's good to know. I'm not familiar with the laws surrounding that, but I'm sure it should be illegal.

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doubagilga t1_iufifs8 wrote

Minors, vulnerable parties, and intoxicated people are unable to sign contracts. That a dentist would incapacitate you and then have you sign would be an instant rejection in court.

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dwinps t1_iueqo8b wrote

Read before signing, that way you know things instead of assuming things

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XvegantourdefranceX t1_iue13ym wrote

If it was no interest how would they make money?

This is literally the entire business model, it's baked into the contract.

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visitor987 t1_iue5fve wrote

You should of gotten a printed copy and the truth in lending discloser. Any loan agreement should be read by over a couple of days. Use google to define any term you do not understand.

Plus its almost cheaper to finance dental thru a Credit Union loan. You can try refinancing loan at a CU before the next interest charge kicks in.

You can join a credit union by openings an account. Most CUs cover anyone who lives in a geographic area now instead of just one employer. But many have kept their founding employers name. Call the CU to see who is allowed to join

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Saigon_Revenge55 t1_iuflu1y wrote

I've done this type of loan via Home Depot credit card a couple of times....never paid a penny of interest...just made sure made equal payment over 18 months even when Home Depot credit card statement asked minimum payments of 1%...never fall into this trap.

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