Lawsuit loans (or settlement loans) can be tricky affairs, as they can take a fairly long time to get issued. More often than not, companies drag on the lawsuit for years in the hope that you will give up.
To counter this stance of companies, many people opt for lawsuit loans which to help them stay afloat until they get their due compensation. Though the prospect sounds appealing, is it really worth it? Is there anything more to it?
Let’s find out.
How do lawsuit loans work?
No matter what your case may be for, you can file a lawsuit loan. But it isn’t as straightforward as it sounds. For starters, you need to have a solid case to have any chance of getting a loan. After all, who would want to put their money in a sinking boat!
You will only be granted a loan if the lawsuit funding institution finds a strong likelihood of you winning the case. Besides this, the loan amount that you can get will depend upon the settlement amount that you may get. Hence lower the settlement value, the lower will be the amount of loan sanctioned.
Once you are through with all the scrutiny, you may finally get your hands on your lawsuit loan, which you can use in whatever way you want, without the sword of repayment dangling on your head (until the settlement is reached that is).
Let’s have a look at some of the pros and cons of these lawsuit loans. This should give you a better idea of whether you should go for one or not.
- Since you now have financial support, you can take your time and prepare your case better in order to win the settlement. A lawsuit loan will give you some breathing space to negotiate a better deal.
- There are no credit checks before the sanctioning of a lawsuit loan. So you can get one even if you have a bad credit score. The future settlement prospects matter more than your financial history.
- Even though the sanction process of a lawsuit loan is rigorous, it is not really lengthy. So if you have a strong case, your loan will be approved fairly quickly.
- Though the lawsuit loans are meant to relieve your financial burden, they can themselves turn into one as their interest rates can fall anywhere between 20% and 60%.
- You have no idea how long your case may go on. So you may end up accumulating interest for a long period of time which may even go beyond the borrowed sum.
- Lawsuit loans such as personal injury settlement loans can be tricky to get, especially because not all cases qualify for loans. Most of the time, only the cases where the borrower has reasonably high chances of winning get sanctioned for lawsuit loans. Hence, you may have to go around searching for a while before you lay your hands on one.
Now that you are better aware of lawsuit loans you can take an informed decision. Make sure that the loan not just takes care of your financial situation in the short term, but is also repayable in the long run.