Lawsuit loans may not generate as much hype as loans from banks, probably due to their lack of publicity. Still, statistics show more Americans involved in lawsuits are turning to this type of financing in their time of need. Most people who take out lawsuit funding do it due to the fact that they need cash now while waiting for a settlement to conclude or payout. With this said, more than 300,000 plaintiffs have received a portion of their future settlements since 2015.
But how exactly do you shop for the best pre-settlement funding or find the best lawsuit loan companies? In short: you speak to your attorney, ensure they will cooperate with the company, do your research, and vet online for a lawsuit loan very, very carefully. Let’s break it down even further.
What is a lawsuit loan?
A lawsuit loan is a non-recourse loan. That is, unlike a bank loan (think credit card), plaintiff borrowers take out a certain amount of cash and then pay it back when the lawsuit settles accordingly.
There are generally two types of lawsuit loans: pre-settlement legal funding and post-settlement legal funding.
Pre-settlement funding, otherwise known as pre-settlement loans, lets you borrow the money you need from your pending settlement without putting up any recourse.
Post-settlement financing requires your case to have already settled — but the settlement has not been paid out yet. You can get a loan if you have a settlement but remember, given the risk in the investment of the claim, settled case loans tend to carry lower interest rates than pre-settlement loans.
Still, for someone who is injured and needs a little help to pay their bills or wants to take care of an urgent expense, even this type of funding can be a viable borrowing alternative. Of course, it is important that you find the right pre-settlement lender.
Are you looking for a good deal on legal lending? These tips will help you shop smartly.
Know where your case stands
Before you start shopping for lawsuit loan companies, it’s a good idea to take a look at your case and where it stands. Interest rates on lawsuit loans vary depending on the funder, how much you’re looking to take out and when your case will settle. Yet, to give you an idea of what you might be working with, consider that one funding company advertises rates from 1.5% to 3%, depending on how strong your case is.
No matter what legal funding lender you find, but, to get the best offer and qualify for the lowest interest rate on a settlement loan, you’ll need to have a strong case or, even better, a case where a compensation offer has been made.
You can quickly check your case’s strength to see if you qualify by speaking to your attorney and asking what the merits of your case are, which will also give you hints on improving your case and how long you will need to wait to get the best settlement or award. So if your case isn’t strong, your accident just happened, or you have had no surgical procedures (yet), you’ll know that you won’t get approved for more than $2,500 to $5,000 until the case progresses.
If your case shows soft tissue injuries, meaning you have not had injections or surgery, it’s a good idea to review it with your attorney one more time. Get their advice if it is convenient to get a doctor’s second opinion, especially for an injury that keeps causing pain. Aside from fighting a well-insured at-fault defendant, the depth of your injuries could tell how much your case is worth, therefore, how much you could qualify for.
Before you apply for a loan on your lawsuit, speak to your attorney about your case
Each funding application triggers a response from your attorney’s office. Each response or no response could be taking time away from your attorney’s concentration of your case and possibly 100 other cases. Applying for short-term financing from your lawsuit from several different lawsuit money lenders at the same time could really hurt your relationship with your attorney and your case.
To help protect your relationship and your case, it’s a good idea to do your research on plenty of companies but also to limit the number of companies you apply with; if possible, limit it to two.
Some pre-settlement cash advance firms may list their qualifications on their websites, such as the defendant’s insurance limits to pay a coming settlement, any current liens you may have, such as bankruptcy or child support.
And you also may want to contact a company directly and inquire directly about your lawsuit, be completely honest on the whereabouts, so you qualify for the best rate.
Pre-settlement cash advance companies do a large amount of research to ensure your case has a high percentage chance of settling in your favor since they will lose their investment if the case settles in favor of the defendant.
This is why most settlement funding companies fund the following cases and not fund high-risk cases where the defendant is not well-insured, or liability cannot be proven:
- Wrongful imprisonment
- Truck accidents
- Police car accidents
- Store slip and fall
- Wrongful death by doctor’s error
- Nursing home negligence
- Medical malpractice
- Commercial litigation
Evaluate the settlement lender
Check out the legal loans available after you research the owner’s past. It is crucially important as your case is to find out if they have been involved in financial crimes. One way to evaluate a funding company is by searching the name of the owner and typing “department of justice” or “FBI case” next to it. If you see that these individual has been involved in any criminal activity, move on.
Once you are sure that the legal loan company’s owner is a legitimate and respectable finance expert with a record of financial experience and high education, ask the following:
- Would your strong case qualify you for a low interest rate legal loan?
- What rates and terms are available?
- Are there any caps?
- How long do I have after signing the funding contract to return the funds if I no longer want it? Three Days? Seven days? Dependant on?
Shop online, but do it carefully
If you have a great case, you may be able to easily qualify for lawsuit funding from an online lawsuit legal lender, but be on the lookout for scams. Some online lawsuit lenders are nothing more than scam artists. They target people who are injured and in significant need of fast cash by promising them loans and delivering interest rates as high as 100% a year.
Steer clear of websites that you cannot research who the owner is, those who don’t have much information made by google, and any pre-settlement lender that charges upfront fees or requests loan payments in advance.
Most importantly, if someone tells you to sign here and doesn’t show you the entire contract, DO NOT SIGN. Vulnerable plaintiffs have been scammed into signing contracts without ever reading or having a copy of the whole agreement, which led to the charge of 100% a year in interest rates.
Lastly, if the company harrases you with calls and emails to get you to sign, DO NOT SIGN. Some of these scammers will constantly call the vulnerable victim to get them to sign a contract out of desperation. If a legal lending individual is soliciting, move on.
Lawsuit loan advantages with Baker Street Legal Funding
Remember, however, a pre-settlement lawsuit loan is not for everyone. While they typically have higher interest rates than conventional loans or credit cards, they are cash advances coming from your pending settlement and should be considered carefully and used responsibly. Nevertheless, if you’re ready to shop for a lawsuit loan, consider Baker Street Funding. When you get a legal loan with Baker Street Funding, we make it easy with competitive interest rates and no hidden shady fees.
You can complete our legal funding application process entirely online, and you’ll have access to customer support right away and when you need it. Plus, you’ll gain all the benefits that come with it, which is, we will match or lower any and every of our competitor’s loan rates. Rest assured that what you see is what you get.
If you like the consistency of knowing exactly what you will pay for your legal loan when you win your case, then Baker Street Funding is right for you offering transparent contracts.
At the end of the day, the decision on the funding amount, term, and rates depend on your unique situation and case. If you have further questions about applying for a lawsuit loan on your case, don’t hesitate to contact us at 888.711.3599.