Plaintiffs looking for a pre-settlement loan must take safety and financial security seriously. This type of financing exists to help plaintiffs cover their living expenses and medical costs while awaiting the favorable outcome of their claim.
While an outstanding advance can be a cause for worry, rest assured that you will only pay back the loan upon the successful conclusion of your case. Beyond that, if you want to settle your case for a maximum amount but don’t have the resources to pay your bills, this type of funding can help you get ahead.
However, no matter how appealing the best lawsuit loans may seem, you should weigh the risk associated with taking out a settlement advance with the benefit it provides.
Pre-settlement loans can do more harm than good when lenders don’t use preventive measures to protect consumers from excessive charges. Although they may allow you to temporarily take care of your financial woes, it is up to you to use common sense to protect your future lawsuit proceeds.
So, is pre-settlement funding safe?
It depends on who’s lending. For the most part, yes, pre-settlement funding is safe. That means if the lender operates with the best practices and disclosures, a pre-settlement loan does not pose any risk to the borrower.
At its core, pre-settlement funding is a portion of non-recourse money secured against your future lawsuit settlement proceeds. When you get a non-recourse loan, you don’t have to declare collateral such as a car or a house. Your credit score and employment are also not checked.
Beyond that, the lender cannot force repayment or seize your assets if you don’t win your case and default on the payment.
On the other hand, since pre-settlement loan companies don’t require collateral to cover the investment loss from unsuccessful claims, you are considered a high-risk borrower.
As a direct result, pre-settlement funding will always have higher interest than traditional bank loans.
What is the interest rate on pre-settlement funding?
Depending on the lender, a pre-settlement loan interest rate can vary from 24% to 100% annually. These days, however, some lenders disregard consumer financial protection altogether.
That said, the interest rate for a pre-settlement loan should not exceed 42% annually.
Since the lender covers the terms and conditions of the agreement due to a lack of industry regulation, some charge much higher interest rates and fees; hence, you may run the risk of losing a big chunk of your settlement or award.
Before you get pre-settlement funding, ask what the annual rate is and if there is a cap—some companies like Baker Street Funding will implement a capped rate so the interest on the loan can’t exceed after a specific time.
An interest rate cap protects you from predatory lending tactics that charge exorbitant rates that don’t ever end.
Having a cap on a contract removes the risks of interest rates going sky-high if your case takes longer than the specified timeline to conclude. The best lawsuit loan companies will offer you a capped rate and lower interest.
Beware of predatory lenders and unscrupulous business tactics that don’t offer caps. Don’t ever sign a funding contract with sharks, and always read the fine print. And, if a lender tells you one rate over the phone and brings you a different number on the contract, don’t sign.
How do pre-settlement loans work?
Pre-settlement funding typically takes 24-48 hours to process as long as your personal injury attorney doesn’t deny you from getting one. You’ll have to provide your personal details about yourself and your litigation. If approved, you and your attorney will sign a contract, and then you’ll get the advance.
Here is how it works:
Apply for a pre-settlement loan.
Start the application process with Baker Street Funding. Make sure you can provide your case information and your attorney details.
Wait for qualification confirmation.
A representative will contact you within business hours to give you a qualification decision.
Wait for the evaluation of your case.
Then, underwriting will work with your attorney in a 24-48 hour timeframe to make a funding decision. You will get notified instantly if your application gets approved.
Get approval and funds.
All approvals before 3:30 pm ET (M-F) are typically funded to your bank account by 5:00 pm ET (M-D) the same day. Approvals after 3:30 pm ET generally are financed the following day (business day). If you prefer a check, it will be sent to be delivered on the next business day.
A pre-settlement loan may seem like a godsend for personal injury victims facing financial burdens since the repayment period won’t happen until the settlement gets paid. However, when determining how safe pre-settlement loans are, it is crucial never to overlook the protection of your expected settlement proceeds by knowing your charges.
When choosing responsibly, a loan for a pending lawsuit can be wise, mainly if you find a trusting lender that offers fixed interest rates, capped rates, and good customer service to ensure you’ll always be in the know and in control of your settlement award.
Getting in contact with an experienced and legitimate pre-settlement funding company could be a hassle but not impossible. Depending on your financial circumstances, a cash advance on your pending lawsuit from Baker Street Funding can provide you with low fixed interest rates capped in your loan’s 2nd or 3rd year.
Wondering how many pre-settlement loans you can get? With Baker Street Funding, you can get as many pre-settlement loans as your case allows.
Want to learn more about Baker Street Funding’s low-interest pre-settlement loans, caps, and secure funding? Check them out today.