After a serious injury recovery comes in two forms. The first part is recovery from your injury. Depending on the severity of your injury, physical recovery could come from a few chiropractic visits or years of treatment including surgical procedures.
The second part is economic recovery. For many personal injury lawsuits, this part only starts once you’ve recovered physically. If the defendant (usually an insurance company) is reasonable, this process can be quick and easy. More often, this can take anywhere from six months to several years.
Insurance companies are out to make money, and they do so by settling cases for as little as possible. Usually, in order to get a fair settlement, injury victims need to work with a law firm or an attorney. In many cases, being able to pursue a case through litigation will result in a larger settlement.
So, you’re injured and out of work, but only receive compensation for your injury and economic loss several years down the road. All the while, you’re still responsible for living expenses like housing, food, medical care, and other necessities.
This is exactly what lawsuit loans (or pre-settlement funding) help plaintiffs with every day. Legal funding can help you bridge the gap from injury to financial recovery.
But, nothing is free. Lawsuit loans come with a cost. At least one lawsuit loan company charges as much as 588% in one year!
When looking for funding, you’ll probably hear a bunch of legal and financial terms that you’re not familiar with. Payoff tables, compound interest, and hidden fees can seem daunting.
This guide will teach you how to focus on what’s important and get a good deal on lawsuit settlement funding.
Which Are the Best Lawsuit Loan Companies and Settlement Funders of 2023?
We tell plaintiffs every day that the best lawsuit loan company is the company that provides you with the best terms. That’s all there is to it.
One of the main challenges in selecting a lawsuit loan is that they are not all created equal. Some funding companies take advantage of your financial desperation and charge high rates and fees. Fortunately, it is easy to compare rates and terms from many different pre-settlement funding companies.
We created this guide to give you the information you need to compare rates and terms. Once you better understand how this kind of settlement funding and lawsuit loans work, you’ll have a better feel for how to choose the right company for you.
Want to learn more about what sets Uplift Legal Funding apart from other lawsuit loan companies?
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What is a Lawsuit Loan?
Lawsuit loans are a financial tool that provides you with the cash you need before your personal injury claim settles.
With a traditional loan, you borrow money from a lending institution. Whether or not they approve the loan depends mostly on your credit score. You pay back the loan (with interest) in multiple payments over a set period of time. The loan may or may not include collateral (like your house with a mortgage loan), but the loan must be repaid no matter what.
In contrast to traditional loans, settlement loans are repaid only when your case settles. The advance is repaid if and only if there are enough settlement funds to repay the lender.
Unlike a regular loan, lawsuit loans have no monthly payments and no credit checks. Approval does not depend on your financial situation. Qualifying depends on the likelihood and value of your pending settlement.
What To Consider When Approaching Settlement Funders
When you first contact a settlement funding company, they should quote you some basic pricing without needing too much information. You may need to provide your case type and your state, but this should be enough for the representative to give you concrete details of interest rates and funding fees.
You should consider asking the legal funding company’s representative the following questions:
- How much is the origination fee? Is this fixed or variable according to the funded amount?
- Do you charge simple or compound interest?
- What is the rate of interest?
- How quickly can I get a cash advance?
- Are you a broker or a direct funder of the lawsuit loan?
Lawsuit Settlement Loans Approval Criteria
If you are pursuing a personal injury claim against an insurance company, have hired your attorney on a contingency basis, and are over the age of 18, you likely qualify for funding. Getting approved, however, requires review of the merits of your legal case.
Basically, lawsuit loan companies evaluate a case based on the following criteria:
- Liability – liability refers to who was at fault for the accident
- Damages – damages refer to your injuries, both physical and economic. You may have medical bills, lost wages, and pain and suffering as a result of your injury. A fair settlement accounts for all of these damages.
- Insurance coverage – most lawsuit cash advance companies only fund claims against insurance companies. The amount of coverage involved is usually the upper bound on the value of your case.
They typically collect this information from your attorney or law firm. With this information (and supporting documentation) the company tries to determine the value of your personal injury case.
Most reputable companies can provide this free case evaluation within 24 hours.
Lawsuit Cash Advance Fees
In order to have a “lower rate” for marketing purposes, some pre-settlement funding companies get very creative with their fees. Consider the following one-time fees that pre-settlement funding companies often use to keep their advertised interest rates deceptively low:
- Processing fees, application fees, and underwriting fees – These are additional fees that some lawsuit loan companies charge for processing your request and for completing your transaction.
- E-signature fee – This is a fee you pay for using the lawsuit funding company’s electronic signature function.
- Delivery and/or handling fees – These are the fees a company charges for sending your cash to you. Most companies send cash directly via Western Union, Moneygram, or bank wire transfer. Each of these services costs the funding company less than $30. However, many companies charge $100 – $200 as a delivery fee. Companies deduct delivery fees directly from the pre-settlement funding you receive. That means the amount delivered to you may be far less than you expected.
- Broker fees or origination fees – These are fees that some pre-settlement loan companies charge when they broker your settlement loan to another company.
Pay attention to the one-time fees the settlement cash advance company is charging. The overall cost can take a considerable bite out of the funds that you receive. Also, most of these fees incur interest.
In addition to one-time fees, some litigation funding companies go in for wide-ranging recurring fees that often prove extremely costly. These recurring fees are purported to cover the costs incurred by the legal funding company. These are also known as the cost of doing business, and you should not be required to shoulder them for the lawsuit loan company. Consider the following common examples:
- Case management or case servicing fees – of management Some lawsuit loan companies charge case management and servicing fees on a yearly or semi-yearly basis. They are supposedly used to manage your lawsuit cash advance file. If you get several advances from a company that charges these fees, charges could accumulate to hundreds or even thousands in case- management fees.
- Document management or archiving fees – Funding companies often charge document managment and archiving fees on a yearly or semi-yearly basis. They are supposedly charged to maintain your funding file. In fact, sometimes these charges apply for each and every funding you receive.
All of these fees are designed to hide the true cost of your advance. Stay away from any legal funding companies that charge these types of excessive fees.
Interest Rates on Pre-Settlement Funding
As noted, pre-settlement lawsuit loans are not actually loans but, instead, a purchase of equity in your settlement or court award. The interest rate set by the lawsuit loan company will play a large role in the cost of your transaction.
The interest rate on your settlement cash advance should have nothing to do with your credit score. But just the number in the company’s quote may not tell the whole story. It’s critical that you know the kind of interest used in your lawsuit loan. Consider the following variations, which can make a considerable difference in the amount of interest you ultimately pay:
Simple, non-compounding interest
Simple interest is interest that is calculated based on the initial amount you borrow. With simple interest, the dollar amount of interest that adds to your total balance each month is the same figure every month. For example, 3% simple interest on a $1,000 loan amounts to $30 of interest each month, every month.
With compound interest, you will be paying interest on the current amount you owe. In other words, you pay interest on principal and interest on accumulated interest. For example, 3% compounding interest on a $1,000 loan is $30 in the first month, but $43 in the 13th month.
Basically, after a year of compound interest, you’re paying 50% more per month than you would with simple interest. After two years, you’re paying more than twice as much per month in interest.
The multiple method is often the biggest smokescreen of all and can be used in a variety of ways to disguise extremely expensive advances. For instance, some lawsuit funding companies may tell you that they do not charge interest or have a “fixed fee” model.
A common example of this is that you pay back 1.5 times what you borrowed within 6 months. You repay 1.8 times what you borrowed between 6 and 12 months. And if your case lasts for longer than 12 months, you pay back more than 2.25 times what you borrowed! It goes up from there and usually caps at 3.5 times the amount you borrowed.
The interest rate attached to your lawsuit settlement is far too important to gloss over. Even lawsuit loan companies that advertise similar interest rates can vary widely in actual cost.
Finding the best lawsuit loan companies
The best lawsuit loan company is not necessarily the one that shows up on your TV or first on a Google search.
The best lawsuit funding company is not always the company your lawyer recommends.
The best pre-settlement loan company is the one that gives you the lowest interest rate on your advance, period.
Research pre-settlement funding
The pre-settlement funding industry is unlike any other. There is very little regulation and a huge information mismatch between plaintiffs and cash advance companies.
Unless you’re an accomplished personal injury attorney or big-wig finance guy, it can be tough to understand the true risk profile of your personal injury case or the baseline value.
Look into which funding companies have the lowest rates for settlement loans. See if they cover the type of injury you sustained.
How quickly can the company get you your settlement funding, is it within 24 hours? Do they cover claims such as medical malpractice lawsuits, FELA, and car accidents? Does the company follow simple rates or compound rates? Is a credit check involved?
Those are all things you should look into while searching for a settlement funding company for your case.
A great place to start when it comes to comparing lawsuit loans is with consumer reviews. Although some unscrupulous companies use various tactics to manipulate their reviews, reading reviews for overall themes can be highly informative.
And if you have a knack for reading between the lines, this is a good time to implement your skills. Check out reviews on Google Maps, Yelp, and the Better Business Bureau (BBB) to see how plaintiffs like you felt about their experience with the pre-settlement loan company.
Always be sure to sort reviews by the lowest value to see what customers who were upset complain about. Don’t worry if there are one or two bad reviews. Take note if a lot of negative reviews seem to tell the same story or complain about the same problems.
The biggest red flags are complaints of deceptive practices. Avoid seeking lawsuit loans from any company with a history of confusing or deceiving its customers.
If a legal funding company doesn’t reach out to you, and instead calls or contacts the attorney on your case, be wary. A good pre-settlement funding agency is on the plaintiff’s side. They should be providing daily updates on your case, be easy to reach, and return your calls.
Be sure to fact-check along the way. Did they promise you ZERO fees for your case? Make them stick to it or walk.
Are they trying to pressure you into signing a contract by saying it will soon be “off the table?” Take their contract to another lawsuit loan company and see if you can get better terms elsewhere. Don’t let anyone pressure you into signing something you don’t understand or aren’t sure of. Rushing into lawsuit funding is a bad idea.
If your lawyer refers you to a pre-settlement funding company, ask them why.
Like any other lawyer, most personal injury attorneys have their clients’ best interests in mind, but some don’t. Make sure you ask them questions so you find the best pre-settlement funding company. Your attorney will know more about lawsuit funding than you do, so try to learn from their experience.
Good reasons for referring you to a pre-settlement funding company would be that they have good rates, charge no fees, and only charge simple interest.
These are good answers. It sounds like your attorney is looking out for you and your settlement. You should follow up by asking what they’ve charged clients in the past, or ask to see a sample contract.
Shaky reasons for referring you to a legal funding company are “I’ve worked with them a lot before”, and “they handle all of our clients’ funding needs.”
These are shaky because they provide no real information. You should follow up by asking why they prefer to work with this company, or why they have sent them cases in the past.
Red flag reasons for referral are “They don’t ask for a lot of information”, “they’re easy to work with”, or “they take reductions at settlement.”
We consider these to be red flag reasons for referral.
If a pre-settlement funding company isn’t asking questions, they’re not doing their homework on the case. If they don’t review your personal injury case documents, they are charging a higher interest rate to cover losses. A lawsuit loan already takes a portion of your settlement away, you want to reduce that portion as much as possible.
“Easy to work with” means your attorney might just be avoiding doing extra work by sending you to the laxest pre-settlement funding company, see above. If you have a strong claim, you’ll want a settlement cash advance from a company that does a good job of vetting claims. Otherwise, you will be charged excess interest to cover their losses.
“They take reductions at settlement” sounds great, but why count on something that’s not clearly written in the contract? You’re signing a contract with a company that’s going to take a chunk out of your settlement. Rely on the contract your signing, not some arbitrary “kindness” later.
If you find a lawsuit lending company by looking online, ask lots of questions
The best lawsuit loan companies will be able to answer your questions easily and clearly. Regardless of their answer, make sure that you confirm anything you are told before signing a contract.
We advise plaintiffs to get a formal quote in writing before applying with any company. When you call many pre-settlement lawsuit funding companies, they will give you the run-around when you ask about rates. They will try to ask for your case and lawyer’s details before providing a quote. You should insist on a written quote before providing any sensitive information.
Ask your attorney or paralegal if they have worked with this company before. See if they have a sample contract from the company.
Uplift, for example, has a deep understanding of the logic behind pre-settlement funding. We can then explain every question or concern you have for us. We take your case seriously because we know that personal injury is no laughing matter. Uplift gives cash advances on most personal injury claims, from medical malpractice to car accidents. And we can get your approval of your settlement loan within 24 hours. Call us to see if your case qualifies for our cash advance in as little as two minutes.
Don’t just take their word for it
Do a quick search on google for “top-rated lawsuit loan companies.” You’ll see at least 20 companies telling you that they are top-rated and that they can help with your case. Call them and ask about their settlement loans. Ask them if they can get you your funding within 24 hours of approval. Ask them what personal injury cases they give cash advances for.
Overall, they’ll tell you they’re the best. That they offer the most reliable settlement cash advance for your case. Great.
If they haven’t been reviewed with a bunch of other pre-settlement funding companies by an independent third party (none of them are), then they’re just making it up.
Look for good Google, or Yelp reviews, but take these with a grain of salt. Often, the only customers who will review a company are those that have been asked for a review. This means that lawsuit funding companies have a large amount of control over their rating.
Tons of reviews over a short period of time? Red flag. The company probably has a campaign going and asks for reviews from satisfied customers. Don’t let yourself be one of the unsatisfied customers. Always sort by lowest rating and see what those folks have to say about the company.
What rates do the best lawsuit funding companies charge?
The best lawsuit funding companies charge a 15% – 20% simple, semi-annual interest rates. You should insist on a rate in this range.
Many lawsuit funding companies will tell you they charge 2% to 3% monthly. Usually, that is a compounding figure. Often, after a formal review, the rate will be closer to the high end of that range. After tacking on fees, you will end up paying more than 80% in the first year.
If you’re a personal injury plaintiff with a solid case, you should never settle for paying that much interest to a lawsuit loan company. Rather, you should aim to pay a total finance charge (including fees and interest) of less than 50% yearly.
Some of the top lawsuit loan companies you can look into
Here are a few of the most prominent lawsuit loan companies that might be worth getting a quote from. Pre-settlement funding companies charge a variety of rates and terms. We encourage plaintiffs to refrain from formally applying with any single company before getting a written quote via email.
If you receive a formal offer from any of these lawsuit funding companies, we will always do our best to beat the terms and match the amount of the offer.
Lawsuit Loan FAQs
Lawsuit loans can be worth it as long as you satisfy these two criteria:
1. You have exhausted all other financial options including asking friends and family and absolutely need the money
2. You shop around to make sure you get the best interest rate possible for your case.
If you don’t do both of these, lawsuit funding is simply not worth it
You can get lawsuit funding by contacting any number of companies online. However, you should take care to find a company that charges low, simple rates. The litigation funding industry is under-regulated. Plaintiffs have to advocate for themselves and be diligent about finding low interest rates with total costs of less than 50% annually.
In some states, it is legal for lawyers to give our lawsuit cash advances. However, in most states, it is not legal for a lawyer to charge interest on advances to clients. It is always a good idea to ask your lawyer if they are able to provide you a pre-settlement cash advance before seeking funding from a pre-settlement loan company.
Once a lawsuit funding company has the information they need from you and your lawyer, it should never take more than 24 hours for them to make a decision. The best lawsuit loan companies can provide you cash the same day you are approved.
Final Thoughts and Quick Tips
Don’t Rush Into a Major Financial Decision
In many cases, getting a lawsuit loan can be fast and easy. That can be great if you need cash immediately. However, remember that getting any sort of loan is a major financial decision.
Start early, compare offers and don’t sign the first contract you receive without comparing rates and terms.
Do Your Research on Pre Settlement Lawsuit Loans
Before you pull the trigger on a lawsuit cash advance company, do some digging around online. Read the reviews you find. Learn more about the basic structure of legal funding contracts, interest rates, and terms. This article is a great start!
Never Pay Money Upfront
A reputable lawsuit loan company will not require you to pay any money upfront. If the lawsuit loan company requires payment upfront, you should consider it a red flag and keep looking.
Compare and Contrast
The easiest way to compare rates and terms is to ask for a “payoff table” that shows how much your funding will cost over time. This trick helps you skip all of the math and see in real dollar terms exactly what lawsuit loans cost.
We advise plaintiffs to request several quotes from several different funding companies. Always ask for a quote on the same amount of funding. Always ask for the quote to be in the form of a payoff table.
Some basic rules can narrow down the pack quickly. Simple interest is very likely to be less costly for you than compounding interest. Lower fees are better than higher fees. The payoff table should summarize the impact of all of these factors and save you the trouble of calculating.
Always compare rates and terms before providing any company your sensitive case details or attorney’s contact info.
Keep It Simple
Again, simple interest lawsuit loans are preferable to pre-settlement loans with compounding interest every time. One of the first questions you should ask is “do you charge simple or compound interest?” Don’t move forward with a company that charges compound interest. Don’t move forward with a company that can’t answer the question.
Be on the Lookout for Brokers
Some companies masquerade as lawsuit loan companies when they are really pre-settlement funding brokers.
If you’re having trouble finding a company that can help you with your case, using a broker can help. Remember that their service comes with a cost – broker fees or origination fees.
Always ask upfront whether the company you will be a broker or direct funder for your case type or state of residence. Broker fees can increase your costs considerably.
Don’t Be Afraid to Ask Questions About Lawsuit Funding
Never be afraid to ask questions. If the company isn’t forthcoming, pooh-poohs your concerns, or is otherwise unresponsive, it’s time to look elsewhere. Questions you should consider asking include:
- What rates do you charge? – You need to know upfront what the interest rate is and also the type of interest (simple, compounding, or a multiple method)
- What fees do you charge? You also want to know upfront about all fees charged, such as for processing, application, and/or delivery. Do delivery fees come out of your approved amount or are they added at the end?
- Do you offer price matching? – In order to stay competitive, some companies will beat the best rate another lawsuit loan company offers. You may be able to use this to shave off a couple hundred more dollars or get approved for more money.
- What documentation will my attorney be required to provide? – Reputable companies that provide loans for settlements require the involved attorney’s cooperation. If the company you are considering does not need input from your attorney, it’s time to keep looking. Remember, a lawsuit loan should not be contingent on the results of a credit check or your financial history.
- When can I expect my pre-settlement lawsuit funding? Every lawsuit loan company employs its own timeline for making funding available. Try to get a straight answer to this question. Ask the funding company to explain the process and how long each step might take on average. What’s the worst-case scenario?
Take Good Notes
Take notes on your calls with each lawsuit loan company. If the company tells you one thing and does another, move on. There are more than a hundred lawsuit funding companies. Skip the dishonest ones.
Doing this ahead of time will save you headaches down the road. You don’t want to get a contract a few days from now that doesn’t match promised terms.
Skip The Scary Sales Tactics
If the settlement funding company gets aggressive with its sales tactics, take a step back and take a moment to consider why they are resorting to such practices.
The use of high-pressure sales tactics is unfortunately very common. Funding offers and promised terms should not expire tomorrow. The rate available today should always be available a month from now. Don’t get pushed into making a bad financial decision.
Reputable lawsuit loan companies are professional in their approach. They will encourage you to shop around and make sure you are comfortable with your decision.
Low Rate Funding and 24 Hour Review From Uplift Legal Funding
At Uplift, we too think that we are one of the best pre-settlement loan companies. What makes us special?
24 Hour Funding
Get $500 – $250,000 as soon as today
Low, Simple Rates
Simple, non-compounding rates that save you money
No Monthly Payments
Only pay at settlement – if you lose your case, you pay back nothing
Why Choose Uplift? We Make Lawsuit Loans Easy:
Uplift Legal Funding is one of the top providers of lawsuit loans in the United States for the following reasons:
- Affordable lawsuit loans with simple, non-compounding interest rates and no upfront fees.
- Non-recourse settlement loans – you pay nothing unless your legal case is successful
- 24 hour approval and same-day transfer of funds via Western Union or bank wire
- Transparent practices and no-hassle quotes on your first call
- Excellent consumer reviews, including a 4.9 out of 5.0 Google rating and an A+ score with the Better Business Bureau
- We provide direct legal funding for nearly all personal injury cases
- No monthly payments
We recognize that you are in a difficult position, and we’re here to help. If you’re ready to take a closer look at lawsuit loans, call us toll-free at (800) 385-3660 today to get an instant quote.