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21:24 BST, September 9, 2020A personal injury lawsuit can be expensive, especially if you aren’t able to work as a result of your accident. Even those with careers can find themselves struggling to keep up with court costs, medical bills, and other costs from their case.
For some, a lawsuit loan presents an attractive option for making up for lost income while they wait for their settlement. However, a lawsuit loan isn’t right for everyone, so you’ll want to carefully look at the factors that could make one right for you.
Do I Need a Lawsuit Loan?
You don’t need to take out a lawsuit loan, but many people who are trying to collect a settlement choose to do so. According to High Rise Legal Funding, sometimes it can take years to obtain a settlement. During this time, you could miss out on wages as a result of your accident or be forced to pay out-of-pocket for expenses related to your case. Many people can’t afford to do this and obtain a lawsuit loan to cover these costs.
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You may benefit from taking out a lawsuit loan if any of the following conditions apply to you:
- Poor credit
- Low savings
- No alternative funding options
- Lost wages due to your case
- Your case may take over a year
There are pros and cons to taking out a lawsuit loan. Knowing what they are can help you evaluate if taking one out is the right decision.
The Pros of a Lawsuit Loan
The most obvious benefit of a lawsuit loan is that you are able to pay for your expenses while you wait for your case to be resolved. A lawsuit loan can help you buy more time in your case if you think you could win a major settlement but can’t afford a lengthy negotiating period. Lawsuit loans also don’t require a credit check, making them attractive options for people who can’t obtain affordable financing elsewhere. Additionally, you won’t have to pay your loan back if you lose your case, and only must pay it back if you win.
The Cons of a Lawsuit Loan
Lawsuit loans often come with high interest rates that can equal half or more of your settlement. Some lenders also prey on people seeking lawsuit loans, making it vital that you research your lender before accepting a loan from them. You will also have to research potential lenders to find one that works for your needs, which can take time and effort, especially if you’re not familiar with the industry. You may also face high additional fees with a loan that will be deducted from your final settlement.
What Happens if My Settlement is Less Than My Loan?
The good news is that if your settlement is less than your lawsuit loan, you won’t have to pay back the difference. While this can benefit borrowers, this unfortunately is a key factor in why the interest rates are so high for this type of loan. Be sure to confirm with your lender their conditions in the event of you losing your case so you know that you’re dealing with a reputable business.
A lawsuit loan could be right for you if you have trouble paying your bills already and won’t be able to afford your case without additional financing. You could also benefit from one if you think longer negotiations will benefit you and lead to a larger settlement. If you decide to get a lawsuit loan, make sure you know what to expect in terms of your final award and payment obligations before signing up.
Interesting related article: “What is a Lawyer?“