The interest rates on pre-settlement loans work based on a few factors, such as your case length and strength.
The interest rate refers to the percentage of the funding amount you’ll be charged each month, every three months, or every six months, and the lower the risk your case carries, the lower your interest rate can be.
Generally, the more the funding company thinks your case is risky, the higher the interest rate will be.
Pay attention to annual compounding percentage rates that quickly add up to your loan, which include the length of the loan’s interest rate, how much you will pay over time, as well as other fees (if applicable).
Choosing a legal funding company that provides non-compounding rates at no more than 3.4% per month is best. Avoid companies with interest rates that will charge between 50% and 200% per year.
Ultimately, depending on the risks of your case, you could receive a loan on your pending lawsuit with much lower interest rates than other cases that carry more risk.