A lawsuit loan gives you money in advance for pending settlement award or claim judgment. These loans can give you respite in a time of financial distress caused due to a personal injury. Once you receive the funds from the settlement, you can repay your loan. But many bother themselves by thinking about what they will do if they lose the case. Everything is usually mentioned in the loan agreement. If you lose the case, you may not have to return the advance amount. The lender cannot ask for a refund if you do not receive one. To avoid such things from happening, these firms scrutinize your documents and weigh out the chances of you winning the case. If they find that you have a high probability of receiving the settlement amount, then only they will sanction the loan.
But what happens if you do not receive the expected amount? If you receive lesser money than was thought of, how will you pay back the loan? Most probably, your lender will not ask for the difference. They only have a claim to that portion of the money that remains after the lawyer’s fees and trial costs are paid.
Benefits of a lawsuit loan
These loans provide good benefits to the applicants. Some of them are –
- You can pay off your pending bills
It happens to be the main reason why most people apply for such a loan. When you meet with an accident and temporarily cannot work, such a loan against a settlement can be a relief for a person who has bills to take care of.
- You need not have to have good credit score to get a settlement loan
For sanctioning the amount for most of the traditional loans, the funding company runs a credit check. But for receiving a settlement loan, a credit score analysis may not be essential. Your lending company will only be bothered with your possibilities of winning the case. Its interest will only be served if it gets the return on its investment.
- You get the loan amount quickly
These loans are processed very quickly once it gets approved. You will most likely receive the amount within 48 hours.
- You can take time to negotiate the settlement amount
When you are in dire need of funds to pay your medical bills and living expenses, you might accept the first offer your defendant will offer you. But once you have the money in your hands to take care of these needs, you will have time to think and come up with a better negotiating offer beneficial for you in the long run.
While considering applying for a lawsuit loan, you must also be aware of the disadvantages you might have to face.
- Higher interest rates
When a loan company offers you a loan, they have their interest vested in you. They look to earn the maximum profit. These loans have higher interest rates. It might leave you empty-handed after your case gets settled.
- Lawsuits are time-consuming
It might take years before your case gets resolved.
Before applying for such a loan, weigh out the pros and cons. You can also think of an alternative loan option if you think you will not be able to abide by the terms and conditions of a lawsuit loan.