Lawsuit funding companies provide pre-settlement lawsuit loans that immediately provide cash for those who filed a personal injury case. A pre-settlement lawsuit loan is also called lawsuit funding, settlement advance, lawsuit cash advance, settlement funding, and settlement loan.
Pre-settlement lawsuit loans will enable the plaintiff to wait for their lawsuit to reach a resolution and get maximized cost for settlement. This will prevent the plaintiff from settling for a lesser amount when struggling through financial burdens of medical costs, bills, and providing their family with basic living needs.
How Much Will You Have to Pay Upfront and Monthly for Pre-Settlement Loan Fees?
A reputable lawsuit funding company like Delta Lawsuit Loans will not charge you upfront. You aren’t expected to pay any charges when filling out an application for a pre-settlement lawsuit loan, and you won’t be paying back your loan until your case reaches a settlement. Monthly payments will also be deferred.
This scenario in pre-settlement funding is its greatest advantage because it gives you financial relief in a difficult time. You can keep up with your bills without having to apply for a conventional loan. It is the much better option for you to obtain much-needed cash in your time of need.
In comparison to a bank loan where collateral and credit is required, along with fees and interest charges, a pre-settlement lawsuit loan, which is not really considered as a ‘loan’ but a lawsuit cash ‘advance’, the company will assume the risk with no monthly payments and no interest fees.
Pre-Settlement Lawsuit Loan Fees You Will Pay When You Win Your Case
Losing a personal injury case will not cost you a single cent which means you are not obligated to pay back anything in your lawsuit loan. But, if you do win, you will be expected to pay the lending company the total amount of the settlement advance, along with other fees.
- Interest Rate or Funding Fee
A typical lawsuit loan can have interest rates that will cost you between 27% and 60% a year. For example, if you received a lawsuit cash advance worth $25,000, the interest can cost you $12,500 or more in just one year.
Interest rates on lawsuit funding are usually compounded monthly so with a $25,000 lawsuit loan on a case that will take two years to settle, you will have to pay back a hefty $32,000 in addition to the $25,000 lawsuit cash advance that you received.
- Processing or Application Fee
A lot of work goes into figuring out whether your personal injury case is worth the lender’s risk. Our lender has to arrange a meeting with your attorney to discuss the details of your case and analyze if you have a strong case worth risking for. The processing fee will compensate for the time, effort, and expertise involved.
- Underwriting Fee
Approval for a settlement loan will need a lot of information from you, especially the legal documents of your personal injury case. Someone at the lending company is assigned to compile your documented information, verifies that the information is true and complete, and determines the risk of extending you a pre-settlement lawsuit loan. Hence, the underwriting fee is collected to offset the expenses involved in this process.
- Origination Fee
Some lenders might charge you an origination fee when your pre-settlement lawsuit loan is actually completed. This fee is used to cover any other miscellaneous costs involved with issuing your lawsuit loan.
Calculating the Overall Cost of Your Pre-Settlement Lawsuit Loan
There are a lot of factors that go into figuring out how much you will be paying for the principal, interest, and other fees on your pre-settlement lawsuit loan when you win your case. The interest rates and fees are going to vary based on the type of lawsuit loan, how complex your case is, and what lawsuit funding company you work with.
When calculating the cost of a lawsuit loan, make sure that you consider the interest rates and choose a company that offers a low simple rate. Extra fees should have a minimal percentage.
Watch out for lending companies who try to sneak extra fees into your lawsuit funding agreement because these fees can substantially inflate the overall payback cost. There are interest rate ceilings set for every loan transaction that protects consumers or individuals who loan from “unfair practices” by lending companies.
A conversation with your lawsuit funder should give you a comprehensive idea of any costs. So if you are thinking about taking out a pre-settlement lawsuit loan, your lawyer may be able to direct you to a trusted funding company that will give you a fair deal with the lowest cost pre-settlement funding that will help lift your burden and offer you room to breathe.