Approval Rates: The Hidden Lever of Patient Finance

Chapter Five

Approval rate determines whether finance works at all

The success of patient finance is often judged by:

• cost

• APR

• or product structure

In practice, one factor dominates: approval rate

If approval rates are low:

• patients get declined

• staff lose confidence

• finance is offered less often

• and usage collapses

If approval rates are high:

• finance becomes predictable

• teams trust the system

• and adoption increases

Key insight: Approval rate is not just a credit outcome. It is a behavioural driver.

Affordability: two different realities

Affordability is often misunderstood. It operates on two levels:

1. Regulatory affordability (lender view)

Lenders are required to assess:

• income

• existing commitments

• ability to repay

This applies to:

• all regulated loans

• regardless of term or APR

Why this matters

A strong credit score is not enough. A patient may:

• have good credit history

• but insufficient disposable income

Implication: affordability is a hard constraint—loans cannot be approved without it.

2. Psychological affordability (patient view)

Patients think differently. They ask:

• how much can I spend monthly?

• how much of my savings am I willing to use?

Key insight (Tabeo data)

Across income levels:

• savings behaviour is remarkably consistent

• average discretionary capacity ~£150/month

What this means

Patients typically optimise for: £150–£250 per month

Not:

• total cost

• or maximum borrowing capacity

Implication: Monthly payment—not total price—is the true affordability anchor.

The role of loan terms

Loan terms directly affect affordability.

Step change: 12 → 24 months

Moving from:

• 12 months → 24 months

reduces monthly payments significantly.

Result

• meaningful increase in approval rates (~10%)

• more patients become eligible

Diminishing returns beyond 36 months

Extending further to: 48 or 60 months

has:

• limited impact on approvals

• but changes customer mix

Key insight: The biggest approval gain comes from 24 months—not 60 months.

What actually drives approval rates

Approval rates are driven by three core factors:

1. Loan size

Larger loans:

• reduce affordability

• lower approval rates

Implication: Bigger treatment plans ≠ higher conversion

2. Customer profile

Approval depends heavily on:

• credit score

• employment type

• financial stability

Important nuance

Certain segments are harder to approve:

• self-employed

• students

• irregular income

3. Lender coverage

Not all lenders serve all profiles.

Best practice

Work with:

multiple lenders across segments

• prime (low risk, low APR)

• near-prime (higher risk, higher APR)

Why this matters

• increases approval coverage

• reduces declines

• improves patient experience

Key insight: One lender = structural limitation on approval rates.

Product design as a lever

Practices cannot control:

• income

• credit score

But they can control: how finance is structured.

1. Offer the right terms

Minimum effective setup:

• 12 months

• 24 months

• 36 months

2. Avoid over-reliance on long terms

• 60 months lowers monthly payments

• but attracts weaker applicants

Insight: Lowest monthly ≠ best approval outcome

3. Match product to patient behaviour

Patients optimise for:

• manageable monthly payments

Not:

• maximum borrowing

A critical mistake: making treatments too large

A common strategy is to:

• bundle treatments

• increase total loan size

Why this fails

• reduces affordability

• lowers approval rates

• delays decision-making

Better approach: sequence treatments

Instead of:

• £10,000 full plan

Use:

• £3,000–£4,000 phases

Benefits

• higher approval rates

• faster decisions

• better patient acceptance

Analogy

This mirrors card payments:

• patients pay in stages

• not all upfront

Key insight: Smaller, sequenced treatments outperform large bundled plans.

The role of APR in approvals

APR has limited impact on affordability.

Why

For loans under £5,000:

• APR changes monthly payments by ~£5–£10

Implication: APR does not materially affect approval rates

What APR does affect

• practice economics

• customer perception

• product positioning

(covered in Chapter 4)

The system view: how to maximise approvals

To optimise approval rates:

1. Design for affordability

• use 24-month options

• target £150–£250 monthly range

2. Control loan size

• avoid over-bundling

• use phased treatments

3. Expand lender coverage

• include prime + near-prime

• avoid single-lender setups

4. Maintain simplicity

• standard options

• consistent application

Final takeaway

Approval rates are not:

• random

• or purely lender-driven

They are:

the result of how finance is structured and applied.

The key shift

From:

• reacting to declines

To:

• designing for approvals

Closing insight

Finance does not fail because patients cannot afford treatment.

It fails because the system is not designed around how affordability actually works.

Transition

With approval rates understood, the final step is:

How to bring all elements together into a single, scalable system.