Companies and businessmen apply for lawsuit settlement loans when they are in the middle of the lawsuit process and need money. In such case, a lender “buys” the part of their lawsuit award or settlement in exchange in advance. By the end of the process, a borrower will have to return this lump of the sum to the lender along with interest and other additional payments.
Loans on the lawsuit are good for people, who plan to settle or win a judgment in a lawsuit. Still, it’s important to think twice before applying for this kind of loan. On the surface, loans for lawsuit might cover short-term expenses and emergencies but, afterward, the cost of the loan can turn to be too high.
The working principle of personal injury lawsuit loans is simple. Firstly, you should submit a personal injury lawsuit. Then you will apply to the lawsuit funding company that will consider your case and estimate how much money you can expect.
When a company approves your request, you should pay principle and funding fee. In fact, you don’t have to make any payments before you settle or win a case. You pay off a debt with the lawsuit award that you get at the end of the lawsuit process.
The cost of the lawsuit loans can be high. The funding fee will cost you between 2% and 4% per month. While it might sound affordable, the annual APR makes up from 27% to 60% and more. Taking into account that a lawsuit can last for years before settlement, it’s quite unaffordable.
Therefore, weigh all pros and cons of YOUR CASE before applying for a lawsuit loan.