There are many drawbacks to lawsuit loans. Because lawsuit loans are non-recourse (only pay if you win your case), their regulation is different from normal loans. This means that lenders charge much more interest, and often become predatory.
Good things to look out for when taking out a lawsuit advance are upfront fees, compound interest, and a trusted name in the lawsuit funding industry.
Funding can be Expensive
A lot of funders charge whatever rate they want. There is little oversight of their rates and fees because pre settlement funding is not a loan.
What to look out for
- Large upfront fees
- Compound interest
- Unclear contracts
- Rude employees
Loans can bite into your settlement
Lawsuit loans are always costly, no matter which company you get them from. If you take too much money out, you will regret it later.
Remember to only take what you need, not the maximum you qualify for.
Compound interest, especially monthly can quickly balloon your lawsuit loan. Remember that 3% monthly interest is really 43% in the first year and gets to 100% by year two!
Ask if the settlement funding company is charging simple or compound interest. Ask them to give you numbers in dollars, not obscure percentages. If there isn’t a clear payoff table on the contract, don’t sign it!
Upfront fees usually incur interest. Don’t let lawsuit cash advance companies charge you large upfront fees. Ask to see a payoff table and a calculation of total purchase price.
Not all cases qualify
Some cases are easy for settlement loan companies to review. Some are very difficult. The more complicated your case is, the less likely you will qualify for funding.
Some lawsuit loan companies only offer car accident lawsuit loans. Ask the funder how often they work on your type of case to save you time.
Tough to find good, honest lawsuit loan companies
It really is tough to find an honest lawsuit loan company. At Uplift Legal Funding, we strive to be the “good guys” of the pre settlement lawsuit loan industry.