What Are Pre-Settlement Loans?
In case you are in the middle of a lawsuit and urgently need some cash, it may be tempting to take out settlement loans until you win the case.
While you are waiting for the lawsuit to settle (which may take time) you can face a mountain of payments, bills, and other necessary expenditures that need to be covered straight away. Some plaintiffs consider borrowing cash against the money they expect to obtain from the lawsuit – such decisions are called lawsuit loans or pre-settlement loans.
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It may not always be a smart decision to get this type of financing. Let’s cover the basics of what lawsuit settlement loans are, how they work, as well as their main benefits and drawbacks. Hopefully, this information will help you make a wise decision that will suit your financial needs.
What Are Settlement Advance Loans?
Many people seek monetary assistance when they face personal injury lawsuits. For instance, if you were injured seriously or if you were hurt in a car accident and you can’t work for some time, costs tend to pile up and overdue bills become your best friend. In this case, structured settlement loans are designed to help you remain financially afloat while you are waiting for the lawsuit to settle.
This lending solution can be beneficial on one hand but be rather expensive and time-consuming on the other hand. Like any other lending option, pre-settlement loans for auto accidents should be considered only when you have no other solution and urgently require financial aid.
Remember that you will have to pay a high price for this option. On the other hand, such a decision can help you diminish stress when you are waiting for the end of the lawsuit as it may get even worse if you ignore your bills and payments.
Who Needs Lawsuit Cash Advance Loans?
These are not traditional lending services for every person. There are several types of borrowers who take out such solutions. They are not designed for every consumer in need as they were specially created as lawsuit loans without an attorney for:
- Car accidents;
- Personal injuries;
- Injuries in the workplace;
- Medical malpractice;
- When you fall down;
- Product malfunction that causes injury;
- Negligence or other cases that led to wrongful death.
How Do Loans for Legal Fees Work?
In order to receive financing, you should apply for loans on a settlement after you have filed a lawsuit. You won’t be able to get approved for this lending decision prior to filing a law settlement. After that, the finance-related service provider will review your case and evaluate your chances of winning this settlement. Yes, you may be rejected or approved depending on your personal situation.
Litigation funding isn’t the quickest way to obtain the necessary funds for your immediate needs. Creditors don’t just give you the money, they lend it and want to make more cash from personal injury lawsuit loans. Hence, the interest rates for this decision are typically sky-high. Once the lawsuit is settled, the creditor will take this money from you together with the fees and interest for the whole period.
Pros of Pre Settlement Funding Loans
There are certain advantages of turning to this assistance:
- You receive the cash for expenditures. The money obtained through this lending solution can help you fund urgent needs and cover immediate expenditures that you have no savings to fund. This way you will be able to avoid overdue bills and missed payments with late charges.
- Loans for legal fees with bad credit. Generally, creditors won’t conduct a credit pull if you request this type of lending solution. They will review and evaluate other criteria before they make their decision to approve or reject your application.
- Money can be obtained fast. In some cases, lenders may accept your application and approve it if it sounds beneficial to them and they are certain the funds will be returned with high fees.
- This will give you extra time for negotiation. Even when you rack your brains trying to find the necessary funds urgently, you shouldn’t accept the very first offer the defendant tells you. Taking out loans against a lawsuit gives you an opportunity to relax and have some time to negotiate better terms.
Cons of Legal Settlement Loans
On the contrary, there are some drawbacks to this decision. You should keep in mind that:
- Such loans come with sky-high interest rates. In fact, these fees can be as high as 60% annually. In some cases, borrowers end up paying much more than the initial sum they have actually borrowed. The smallest fee is 20% so you need to be careful and shop around for the best offer.
- Loans on a lawsuit may be time-consuming. Some settlements last for a few years and you will have to pay interest rates for the whole period. This is a serious matter to consider.
- Such loans are not regulated by the government. The laws and regulations for legal fees loans vary from state to state, but there are no federal laws at all. If you want to avoid pitfalls you should look around for reliable creditors who are certified and offer reasonable rates for their services. Otherwise, think about alternative lending solutions.
How to Find Loans for Lawsuit from Reliable Creditors
It is necessary to evaluate all the benefits and downsides of applying for this type of financial assistance. Remember that lawsuit advance loans aren’t regulated by the federal government and there are hardly any set rules or laws for their usage. Thus, every creditor may want to get huge fees and make money from you.
Always read the company’s feedback and rely on professional reviews of various service providers. Don’t sign the contract if you are unsure whether the company is legal. Another interesting fact is that sometimes borrowers might not pay the loans on lawsuit settlements off. This happens in case a borrower loses the case. That’s why not every creditor is eager to issue the funds or approve the request only with sky-high fees.
Be Careful with Your Lending Decisions
Car accident settlement loans may be helpful for the period when you can’t work but still need to support your needs, pay bills, and other essentials. While you are waiting for the lawsuit to settle, it may be a sound decision to borrow some funds.
However, you need to evaluate the risks and be responsible for the cash you obtain. It may turn out to be extremely expensive to repay this debt. More than that, such decisions aren’t regulated by law. You may also want to consider other options such as small personal loans, credit cards, or your family and friends. If you need money asap consider alternative options first.