Settlement advance loans are the financial help that a borrower gets during a lawsuit in the process of settlement. Lending companies give money to cover expenses during the course of litigation. A borrower has to return these funds after the settlement of the lawsuit including interest, fees, and additional payments.
There are three main groups of borrowers:
- Plaintiffs in personal injury suits.
- People in civil rights discrimination suits.
- Heirs waiting for the settlement of the estate.
Still, every kind of plaintiffs can apply for pre settlement loans.
The main purpose of these loans is to cover expenses that keep on accumulating. When a victim gets into a personal injury such as traffic accident, the settlement might last for years. During this time, a person might have no ability to work and pay off the debts and make necessary expenses. In these cases, lending institutions surround a victim with offers.
The main disadvantage of structured settlement loans is sky-high interest rates. The interest can be as high as 60% per year. It means that if you apply for $30,000, you will have to pay $18,000 in interest. Sometimes the APR can be bigger than a loan amount itself.
Unfortunately, the government usually doesn’t regulate these loans. It means that they aren’t safe. Therefore, if you are the plaintiff and need money asap, consider other options for financing first.