How Much Do Lawsuit Loans Cost?

How much do lawsuit loans cost

When you are involved in an active personal injury lawsuit, the only thing you may be bothered about at the end of your case would be a lowball compensation. You may have smart case strategies with your lawyer to develop a strong claim against the defendant. But in the end, to punish the at-fault defendant, a successful case can end up in a big award of damages (granted by the court) if you can hold up for enough time until you get the settlement you deserve.

If you can afford to support yourself while injured and wait for a better settlement offer, the other party can end up proposing what you want, which could leave you with enough money to move on with your life and make up for the loss without going through the challenging phases of litigation.

However, if you are tempted to settle your case for less than what is worth due to a financial crisis, understand that this doesn’t have to be an option and you can borrow money against your lawsuit.

Reasons why plaintiffs borrow money agaisnt their settlement

It is a well-known fact that lawsuits are inherently lengthy in nature, and at times, they are torturous in the manner that they drain the pockets of innocent helpless victims. Specifically, in cases of personal injuries, where injured plaintiffs are left with long-standing physical disabilities or impairment, that they are not able to work for a living.

This inability to earn money is supplemented by the expensive day-to-day costs and medical treatments required to fight a significant legal battle. Even where a favorable judgment is clearly apparent, it can take months to reach a conclusion and even years to get the settlement money paid out.

Some plaintiffs face severe hardships during these times and are financially challenged to the extent of not being able to put food on the table or even worse, become homeless.

In such scenarios, having the freedom from accumulating bills is the biggest reason why plaintiffs take the path towards pre-settlement loans. Lawsuit loans can turn out to be a sigh of relief when your financial situation is critical.

At Baker Street Funding we understand that your finances have been exhausted and all sources of money are most likely choked, this is why we provide personal injury lawsuit funding in the fastest time available. Our lawsuit cash advance process can take from 24 to 48 hours from the time your attorney sends us your case file to the moment you get paid.

One important thing to keep in mind is that although your lawyer is not allowed to loan you money, they have to agree to help you find a solution. Despite the fact that they cannot stop you from getting a lawsuit loan, if your lawyer denies you from getting a pre-settlement loan, no matter how critical your situation is, no company will fund your case.

How much should pre-settlement funding cost?

The total cost that a plaintiff may have to bear depends on the size of the cash advance he obtains and the period the lawsuit lasts for. The longer the matter is dragged, the more interest you will be charged and then deducted once a settlement is secured.

Pre-settlement funding interest rates are higher than traditional loans due to the risks in the investment. In short, if your case does not end up in a settlement or an award of damages, you won’t pay back the money; you will owe nothing. In return for the advance, a funding company will keep a portion equal to the amount they lend you (plus interest rates).

Lawsuit funding costs vary from lender to lender depending on who they are. In general, most companies charge between 2.95% to 5% per month on the total amount borrowed in compound interest. No matter what their monthly charges are, your average lawsuit loan cost should be no more than 41% a year in total. The best lawsuit loan companies offer the borrower a rate cap and fixed (non-compounding) rates. This means that your interest rate should end in the third year (even if your case takes 10 years to settle) and it won’t compound every month. A compounding interest rate can eat up your lawsuit as may go up to 400% in just 2 years!

Fees and interest charged by each funding company obviously vary, and some lenders may even charge high filing and processing application charges too. For that reason, it is important that you read the contract in full.

At Baker Street Funding, we provide lawsuit loans with low interest rates to help you save money and help us gain more business. We charge lower rates due to the impeccable reputation we have and compliance with upcoming industry government regulations that will be banning predatory settlement lenders, including those who have been engaged in financial crimes and fraud against 911 victims in the past.

Some of these predatory lenders are on page 1 when you search them, be extremely careful and research the owner’s history under government sites such as the Justice Department and FBI files, to avoid losing your settlement money in the future.

Baker Street Funding’s rates vary from 2% to 3.4% monthly not compounding with a 3-year rate cap. This means that if you take out $5,000, your approximate rate will be $1,140 for 1 year on $10,000.

Learn more about lawsuit loan costs in our pre-settlement loan calculator.

Insider tip

To avoid predatory companies, it is crucial that you sign a contract that mentions what your yearly rate will be. Be very careful with those companies underpromising plaintiffs that they offer 1% rates. These same individuals have gained a reputation of charging compounding rates that go from 5% a month up to 200% a year.

Can you consolidate a previous loan for a lower rate?

If you are looking to get more pre-settlement loans to lower your rate, you should know that you can get as many advances as your case supports thus you don’t have to settle with a predatory lender.

Baker Street Funding is aware of those firms. We buy out previous advances all the time from clients looking to lower their rates from the same individuals who have been overcharging them. In short, the interest rate on a pre-settlement loan with Baker Street Funding can save you up to 22% a year if you consolidate your previous loan with us.

A pre-settlement advance is hence a smart choice if you fund with a company that cares. Anyone going through a round of a personal injury lawsuit can sign up for a lawsuit loan but remember not all companies offer the lowest cost pre-settlement funding.

Insider tip

The gist of pre-settlement loans lies in the plaintiffs’ inability to pay out even a single penny until the lawsuit ends up in a settlement or jury award. This means that a legal funding company should never require you to make any payments starting from the application phase until the litigation reaches its end.

Why do lawsuit loans cost more than traditional financing?

In general, a settlement lender will assess your application approval upon the gravity of your case. Credit ratings are not taken into account while examining an applicant’s credibility for a lawsuit advance, and most companies do not perform background checks or employment status, which makes lawsuit funding completely different from conventional bank loans.

Since legal funding companies take on all the risks attached to the litigation, nothing would be payable if your case ultimately fails. Also, you don’t need to provide collateral or make monthly obligatory payments. Hence, you will be at significant risk by obtaining a bank loan under challenging economic times while having the alternative of non-recourse financing.

How does the pre-settlement funding re-payment work?

With some of these benefits, you may be suspicious of what else will a funding company charge you for all the services they rendered you? In a nutshell, once you win your case, your attorney will pay back the money you obtained during the pendency of your lawsuit. This makes the principal amount being returned and an additional fee or interest charged any other fee stated in the agreement that you and your attorney signed.

With due honesty, these charges are higher than traditional loans as explained above. Do not expect a lawsuit funding company to lower your payment if you had already signed a contract. This is why is very important that you only sign a contract that won’t charge you more than 41% a year.

Remember, a funding company provides substantial financial grants to injured car accident plaintiffs or wrongful imprisonment victims, almost instantly. All for a portion of the hopeful winning lawsuit settlement proceeds, which is the very foundation of which lenders carry an extremely high risk in the event of losing the case.

A reputable lawsuit lender buys uncertainty and charges positively for it. Even reasonably higher rates than traditional financiers can sometimes be fair since legal funding companies need ample backup to lean on when the lawsuit fails and no recoveries are made.

Insider tip

Some funding companies do check your credit, although they should not do a soft check on your credit history, those companies are also known to charge 80% a year in interest rates. Be careful with any company that checks your credit for a lawsuit advance. They will use your bad credit as an excuse to overcharge you

In conclusion

Owing to the variation in rates charged by each lawsuit funding company, you should discuss the interest rates with the funding company beforehand. It may also be wise to speak to the attorney handling your matter before applying for funding somewhere.

Your attorney may direct you to a lawsuit funding company that fits your instant case with rates that are reasonable. They may also be better able to inform you of the case’s foreseeable results and how long could it probably last. Contracts for pre-settlement lawsuit advances are usually simple and straightforward. However, honest advice can clear out a lot of misconceptions for you.

Even though your lawyer may recommend you to a funding company, always read up on how much you will pay a year. If you calculate a higher number than 41%, you can seek a funder on your own and compare rates. Ultimately, it is your decision on who you choose to fund your litigation with.

Also, since lawsuit funding companies contact your attorney to get a hands-on overview of your entire case merits, it is better that your attorney is informed beforehand on your plans to seek a lawsuit loan externally.

With Baker Street Funding, the procedure is pretty straightforward, with no hidden charges or surprises for the plaintiff. If you’re ready to apply for a lawsuit loan with a reputable lawsuit lender, check out Baker Street Funding lawsuit loans today.

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