Cosmetic procedures in Canada are not cheap. A breast augmentation runs between $8,000 and $12,000, a tummy tuck costs $10,000 to $15,000 and liposuction averages $6,000 to $12,000.
These surgeries are rarely covered by provincial health care, yet demand and financing for them have continued to grow in recent years.
And while you can pay for a procedure with a bank loan or a credit card, some predominantly younger clients are turning to alternative financing companies that offer up to $50,000. They provide quick and easy access to money, while traditional bank loans can be harder to secure.
The trade-off is the cost. An alternative cosmetic and medical lender will charge anywhere from 10 to 29.99 per cent annual percentage rate, depending on the borrower’s credit profile.
Conversely, the average interest rate on an unsecured line of credit ranges from 10 to 11 per cent for borrowers with good credit scores between 660 and 724, according to Equifax.
And if the client owns a home, interest rates for an average home equity line of credit (HELOC) range from 4.85 to 7.20 per cent, according to lendsimpl, an online Ontario-based mortgage broker.
The first question a person seeking medical or cosmetic financing should ask themselves is whether they can get a bank loan, said Stacy Yanchuk-Oleksy, CEO of Money Mentors, a credit counselling and debt relief agency in Calgary.
That should enable a person to make an informed decision, she said.
There are a handful of alternative financing companies that provide loans and flexible payment plans specifically for cosmetic, plastic, and elective medical and beauty procedures, often partnering directly with surgical clinics across the country.
Toronto-based Bojana Ceranic is the director of marketing and communication at fintech iFinance, which runs a cosmetic and medical financing program called Medicard. It offers loans between $500 and $50,000.
Over the past five years the Medicard business has grown five-fold, its employee count has doubled and sales have increased, she said, declining to provide actual numbers because it’s a privately held company.
Medicard offers loans in partner clinics through a quick, electronic approval process in the cosmetic and medical providers’ offices.
Within minutes, clients get a credit check and can be approved to borrow money for procedures, with loan terms ranging from six months to seven years and interest rates between 7.95 and 22.9 per cent. If approved, Medicard pays the provider directly.
The loan process can take between one to five days at a traditional bank. They review a borrower’s credit report and score, income, debts and other financial information before approving or denying an application.
Alternative lenders may use different underwriting criteria and algorithms, which can make them an option for clients who may not qualify for conventional bank financing.
Beautifi, a Vancouver-based financing company specializing in elective medical procedures and cosmetic surgery, has a similar model to Medicard. Through partner clinics, applicants can apply and if approved obtain fixed rate instalment financing in minutes for loans up to $50,000. Terms range from six months to six years, with interest rates between 5.99 and 29.99 per cent.
According to Ryan Brinkhurst, founder and CEO of Beautifi, the average client has an interest rate of between 10 and 13 per cent on a two- or three-year term, making the loan much cheaper than putting the full amount on a credit card – but more expensive than a bank loan or HELOC.
“Our average customer at Beautifi is a prime customer and has an over 750 credit score,” Mr. Brinkhurst said. “Most of our loans are paid back – we have one collections person.”
In addition to cosmetic and plastic surgery, some alternative lenders can also cover botox, laser hair removal, professional hair transplants, dental work, laser eye surgery, as well as fertility treatments. The cosmetic and elective medical procedure industry is booming in Canada and internationally.
Globally, there were 35 million esthetic procedures performed in 2023, a 40 per cent increase from four years earlier, according to the International Society of Aesthetic Plastic Surgery.
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In Canada, esthetic surgery procedures generated revenue of $4.4-billion in 2023, according to San Francisco-based market researcher Grand View Horizon.
Much of that growth is being driven by millennials, social media-savvy consumers in their 30s and early 40s, who are purchasing procedures including liposuction, breast augmentation surgery and veneers, as well as services such as fertility treatments.
Although alternative financing lenders generally approve applicants with prime or slightly subprime credit scores of 550 or higher, some borrowers may be more vulnerable if their financial circumstances change, Ms. Yanchuk-Oleksy said.
“When you take on debt and if you lose your job or you become sick, this will be one of those things that cascades,” she said.
Millennials currently have some of the highest delinquency rates in Canada, at 2.35 per cent, largely due to credit card debt and auto loans, according to Equifax.
Toronto-based Caryl Newbery-Mitchell, senior vice-president at MNP Ltd., an insolvency firm, said consumers should carefully review the total cost of borrowing – including interest charges and fees – relative to the cost of procedures.
“If you waited six months, would you be able to save up half that cost?” she asked.