A lawsuit loan provides a plaintiff with financial relief as the case proceeds. The funds help settle medical bills, child support, utility bills, and other monthly obligations.
To get the funds, a lawyer needs to cooperate with a loan company. They should give them all the essential facts about your case so that they can determine its worth. Once they form a trustee with the company, a lawyer should agree to protect the lender’s interest and ensure that they receive their money.
How Lawsuit Loans Work
Before a lawsuit company offers funds, it does a thorough evaluation of each case to determine the amount they could receive. The process is essential since the loan security is the jury award or the injury settlement. Usually, no other collateral is required to secure the loan. Whether a plaintiff has good or bad credit, a loan can be approved if the settlement amount can repay it.
While applying for a lawsuit loan, you need to provide your case details and lawyer’s contacts. The loan company then uses a team of experts to evaluate a case since it’s a substantial risk to offer the funds. If the case can settle for adequate money to repay the loan, they will offer the requested amount.
When a plaintiff gets involved in litigation, they can get a lawsuit loan.
Lenders offer loans for personal injury claims such as:
- Products liability
- Car accidents
- Premises liability
- Medical malpractice
Factors Affecting Lawsuit Loan Cost
Before going for a lawsuit loan, you also need to know the interest charged. Still, it would help if you estimated how long the case would determine the actual cost. It can be a bit tricky to have a correct figure, but a professional attorney can help get a rough estimate.
A review by the New York Times showed that lawsuit lenders charge unregulated interest rates that can surpass 100%. It adds more risks since the injured can have very little money at the end of the case. Yet, the interest rates keep accumulating every month.
You can check the loan’s compounding interest, whether it’s weekly, quarterly, or yearly. For instance, you may want a $10,000 advance from a loan company, which has an interest rate of 3%, compounded monthly. Keep in mind that it’s charged on the accumulating interest and the borrowed principal. After six months, the total amount owed to the company would be $11,941, $14,259 in a year, and $20,328 in two years.
Why Opt for a Lawsuit Loan
The main reason why people opt for a lawsuit loan is that it’s risk-free. Repayment of the loan is only possible when you win a case. For instance, if you get a car accident loan, then your attorney cannot settle the case to get the compensation; there is no other obligation. You keep the money.
The loan also helps a plaintiff settle several bills, especially when they are in a tight economic situation. It offers the much-needed financial breathing space since the case can take a longer time than expected. According to High Rise Financial, after being approved for a loan, you can receive funding in 24 hours.
A lawsuit loan also helps to attain a better settlement. If a plaintiff depends solely on the award to pay for their needs, the funds give them more time to consider the settlement offer. With financial relief, an attorney can negotiate with the defendant and obtain a fair result.
A lawsuit loan is an excellent solution for a plaintiff to access immediate funding. It also gives you a stronger negotiation position with the defendant’s lawyer. However, this kind of funding isn’t right for every situation, but a professional can help you make the best decision.