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How Are Lawsuit Loans Different Than Traditional Bank loans?

Lawsuit Loans are also called pre-settlement loans, legal funding, or lawsuit funding. They are not actual loans in the regular sense of the word. Some major differences between lawsuit loans and traditional loans set them apart in the terms and conditions.

A Pre-settlement Loan Is Not a Loan But An Investment

A legal lender will see a pre-settlement loan as an investment in the expected settlement. They believe in your claim and will want to help you financially in your daily life, without the pressure of needing to accept a lower and earlier settlement, so you can persevere and receive the full settlement you deserve.

What are the major differences between a regular loan and a lawsuit loan?

Regular LoanLawsuit Loan
Secured/UnsecuredExpected Lawsuit Settlement
Not Risk-free100% Risk-free
Monthly RepaymentsNo Monthly Repayments
Credit CheckNo Credit Check

Secured/Unsecured vs Expected Settlement

Regular loans are issued in unsecured and secured debt. Unsecured debt is usually small amounts of credit issued in the form of credit cards, small loans, etc. Whereas in the case of secured debt, the person taking out the loan will come with collateral to secure the debt against it. These are all measures put in place to secure repayment in case they can not repay the loan. 

However, a lawsuit loan or a pre-settlement loan will only be issued to people who are already in legal proceedings. This is one of the criteria a legal funder expects in order to get repaid, as legal financiers are paid out of the settlement awarded to the plaintiff when the court proceedings come to a successful end.

Recourse vs Non-recourse? 

What we understand to be classical loans are secured and unsecured debt. The issuers of these products have legal contracts in place that will enable them to always be able to reclaim their money. In legal terms, this is called recourse. 

Pre-settlement loans, on the other hand, are of a non-recourse nature, this is because of the no-win-no-fee structure built in the pre-settlement funding agreement. This stipulates that the pre-settlement loan is only repayable out of the anticipated settlement.

100% Risk-free

The non-recourse aspect of pre-settlement loans put the plaintiff at ease knowing that their bills are paid for, even if the anticipated settlement does not materialize. Making it a win-win situation and 100% risk-free.

Monthly Repayments vs No Monthly Repayments

A traditional loan will expect you to make repayments on a monthly basis, repaying the interest and the principal to the loan. Pre-settlement loans only expect you to repay when the settlement has been released to your lawyer.

Credit Check vs No Credit Check

When going through an application for pre-settlement funding, Tribeca Lawsuit Loans does not consult your credit score. Unlike traditional loan applications, which always consults your credit score. The underlying value for a pre-settlement loan is the settlement that will come available to you from your lawsuit. It is based on the strength of your case, which is reflected in the legal theory used, evidence provided, and the damages owed to you.

Can I Start My Lawsuit Loan Application Now?

The criteria to start your lawsuit loan are:

  • You have undergone an injury or injustice
  • Already have an attorney
  • Commenced legal proceedings

If you would like to discuss this or want more information about pre-settlement loans give us a call on 866-388-2288 or fill out the online form to discuss application options.


More Posts

Is Pre-settlement Funding a Loan?

Pre-settlement funding is technically not a loan but an investment in the anticipated settlement of your lawsuit. Pre-settlement funding has distinct characteristics that set them

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