According to recent statistics, around 95% of law suits are settled before they ever go to trial.
The main reason that people chose to settle is that taking a law suit to trial can take years to complete. And after spending years waiting for compensation, the law suit could be dropped or ruled not in your favor. But, even if you settle, you may be waiting on your settlement funds for months — especially when dealing with a class action law suit.
This is where law suit loans come in handy.
Keep reading to find out what exactly a law suit loan is and the advantages and disadvantages of getting one.
What Is a Law Suit Loan?
In simple terms, a law suit loan is when a lender provides you with your law suit settlement amount before you personally receive compensation. It’s a form of advanced funding that is also referred to as litigation financing.
Even though the settlement process is quicker than taking a case to trial, you could still end up waiting months or years for your money depending on how complex the case is. If you need your money as soon as possible, a law suit loan is the best option.
The lender will review your case to figure out what they believe your settlement amount will be. They can then lend you all or a portion of your future settlement earnings.
Advantages of a Law Suit Settlement Loan
There are many advantages of a law suit settlement loan, but the biggest one is the fact that if you need cash quickly. Going along with this, some people may settle for a lesser amount if they are in need of cash, so a settlement loan will give you and your lawyer the flexibility to negotiate the best settlement possible.
Another great reason to go with a settlement loan is that if you lose the case, you won’t owe any of the money back. The lender gives loans based on their own risk assessment and if you end up losing your case and don’t receive a settlement, you won’t have to pay back the loan.
These advantages of getting a settlement loan are just a few of the main ones, but there are many more depending on your situation.
Disadvantages of a Settlement Advance
There are disadvantages of getting your law suit money through a settlement advance. The biggest drawback is the interest rates associated with these loans.
Since these loans are fairly new in the financial world and generally unregulated, the interest rates can vary between 27 and 60%. So if you decide to take your full expected settlement amount out in a loan, you’d end up paying significantly more for the loan in the long run.
Get Your Money Now
After reading this article, you’re ready to make an informed decision about whether a law suit loan is right for you.
If you’re in need of money quickly and want more time to negotiate your settlement, a settlement loan may be the best solution. But, if you don’t want to end up paying back more money in interest later and can go without the money for a few months, try to steer clear of these loans.
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