As a matter of policy, I do not give any legal advice in response to questions posted as comments or otherwise in this blog. However, the following question piqued my interest and provides a platform for discussing the sort of everyday problem an average person might encounter. The question was:
I have a fear of dentists and have neglected my teeth for years. The pain is so great in a few teeth that I finally broke down and went to a sedation dentist. They examined me and came up with a proposal to fix my entire mouth for the sum of 13,000.00, and finance it. The financing would result in the final total being 18,546.00 from GE Money Bank. Never heard of them. After having a day to crunch the numbers, the 309.00 payment over 5 years was going to be difficult. My girlfriend is willing to pay the dentist the 13,000.00 in cash, but I’ve signed a contract stating that I agreed to the 309.00 payment for 5 years. The contract was signed Friday afternoon, the first session is scheduled for Monday (08/02/10). Can I rescind the contract and simply give the dentist cash, rather than incur all that interest? What are my choices? No work has been done on my mouth as yet. My dentist would be happy to get paid the cash, but the contract that was signed would probably have to still be honored. How could I cancel this contract?
Am I stuck with the ridiculous interest payments and the grand total of 18,546.00?
First, congratulations to the reader for realizing that he has a signed contract that may be valid. You would be surprised how often clients come into the office having just signed a contract for the purchase of real estate for many hundreds of thousands of dollars and say: “I just signed this contract. Can you look it over and tell me if it is okay?” It is too late to have your lawyer look over a contract after it is signed. At that point, if you have all the requisites for a valid contract, the damage is done. So that is lesson number one — have your lawyer look over contracts before you sign them and not after.
Second, the contract is between GE Money Bank and the reader. It is not between the reader and the dentist. Nevertheless, the dentist is still the key to backing out of the contract at this time. By the way, the GE in GE Money Bank stands for General Electric and it is a major consumer finance company.
Finally, I think the key to the reader’s problem is simple — just ask. On Monday, he should walk into the dentist’s office a little early and offer to pay up-front if the dentist will tear up the contract. I bet that the dentist will be happy to tear up the financing contract and take the money. This is especially true if he just signed the contract on Friday. Most likely it has not been submitted to GE Money Bank yet and no monies have been advanced to the dentist.
All is not lost if the dentist will not tear up the contract and take the money. If that is the case, the next step is to read the contract. Interest is charged for use of money over time. The $5,546.00 interest charge is based on the use of the $13,000.00 for three years. If there is no pre-payment penalty in the finance contract, then the $13,000.00 can be paid at any time and the interest due after the date of payment avoided. Even if there is a pre-payment penalty, it is likely to be much less than $5,546.00.
I am often surprised by how often someone will come to me for a “legal” way out of a situation when they have not even tried to talk to the other party. Sometimes the solution is as simple as asking. I will bet that is the case here. But, if not, the next step is to read the contract and see if anything in it can be used to your advantage or keeps you from doing what you want to do. In this case, as with most finance contracts, it probably can be prepaid and some money may be saved.