When your civil case drags on and bills are mounting, a lawsuit loan, also known as pre-settlement legal funding, gives you access to your future settlement now, so that you can pay your current expenses. Pre-settlement legal funding can help you bridge the time from injury to recovery. But nothing is free. Lawsuit loans come with interest and fees. So, how can you get the best lawsuit settlement loan?
Benefits of Lawsuit Loans
The best lawsuit loans have a lot to recommend them:
- Lawsuit loans are non-recourse, so your personal finances, assets, and property are never at risk. In fact, if you lose your case, you don’t have to repay the loan.
- Pre-settlement legal funding can be used to pay anything you choose. It’s your money to use as you see fit.
- Lawsuit loans can help you to receive a larger settlement in two ways:
- Legal lending lets you pay your bills no matter how long your lawsuit drags on. This counters the defense strategy that attempts to force you to settle for a smaller compensation now so you can pay your bills.
- Because your lender is invested in the successful outcome of your lawsuit, they may provide your attorney with case funding to cover expenses like expert witnesses, testing, and other litigation tools that can strengthen your case.
While a lawsuit loan might be your best move, not all lawsuit loans or lenders are created equal. Some legal lenders charge high-interest rates or compounding interest, and some use hidden fees to artificially lower their advertised interest rate. Because these are non-recourse loans, they can never charge more than the settlement you get, but the best lawsuit loans leave you plenty of money left over.
What Makes for the “Best” Lawsuit Loan?
A lawsuit loan may be your best move, but it is worth taking your time to ensure you get the best lawsuit settlement loan you can. But what does this mean? The best lawsuit loan is the one that costs the least money overall to repay. However, this does not necessarily mean that the lowest interest rate is the best loan.
Although legal funding does not put your income or assets in jeopardy, it still represents a financial obligation that must be repaid if you win your case. So, it’s essential to choose the legal lender you work with carefully, and make an effort to negotiate the best lawsuit loan you can. Specifically, you want to work to get a loan whose fees and interest rate won’t eat right through the settlement. So, let’s tackle interest rates and fees first.
Why the Best Lawsuit Loans Charge Simple, Non-Compounding Interest Rates
Every legal lender charges a different interest rate. Some of the best charge rates vary depending upon the facts related to each case. And some lenders even claim they don’t charge interest — they charge a “fixed fee”, sometimes called the “multiple method,” instead. Always ask for the interest rate and fees in writing before agreeing to any loan, and be sure you understand them. While you want a low interest rate, it’s even more critical that you get a simple, non-compounding rate. Let’s see why:
How Does a Simple, Non-Compounding Interest Rate Work?
A simple interest rate is calculated based on the amount you borrow, called the principal. For simplicity, let’s say you take out a lawsuit loan of $1,000. A 3% simple interest rate on that loan amounts to $30 interest each month, every month for the length of the loan.
How Does a Compounding Interest Rate Work?
With a compound interest rate, interest is charged on both the principal and the accumulated interest. Because of compounding, a lower compound interest rate may cost you more money over the life of the loan than a higher, non-compounding rate.
For example, on the $1,000 loan, a 3% compounding interest works like this:
- In the first month, you would owe interest on the $1,000 principle, which comes to $30.
- In the second month, you would owe 3% on that principal plus $30 interest, which comes to $30.90.
- Over time, this adds up every month. In the 13th month, your interest alone would be $43.
How Does the Fixed Fee Work?
Some legal lenders claim they don’t charge interest at all. Grab your wallet and read the fine print! These lenders charge a “fixed fee” based on the length of the loan. Often, the fixed fee starts at 1.5 — but it’s not an interest rate. Watch how it works:
In the case of a $1,000 loan, the 1.5 fee means the lender charges 1.5 times the amount of the loan if it is paid back within six months. The fee may go up to 1.8 times if the loan is paid in 7-12 months, 2.25 times for over 12 months, and so on. This adds up to $1,500 if the loan is paid within six months. $1,800 if the loan is paid in seven months, and it just keeps growing. Remember, a lawsuit can drag on for months or years, and you have no control over how long it goes!
Predatory lenders charge compounding interest rates and hidden fees to obscure how much they charge for their loans. At least one company is known to charge as much as 588% and many charge interest and fees that add up to 100% per year!
That is why when searching for the best lawsuit loans, you should always look for a lender that charges a simple, non-compounding interest rate like Tribeca.
Watch Out for Fees
Savvy borrowers look for a legal lender that charges a low, simple, non-compounding interest rate. But that’s not enough. Some lenders charge numerous hidden fees to lower the interest rate they advertise. They may charge:
- Processing fees: Also called application fees or underwriting fees. Some lenders charge these fees for processing your application and making you an offer.
- E-signature fees: Some lenders may charge for the electronic signature function.
- Delivery and handling fees: Some lenders charge $100 to $200 simply to deliver your loan funds to your bank account, a transaction that doesn’t cost the lender more than $30!
- Broker fees: Some lenders aren’t even lenders; they are brokers working with a lending company. They charge a fee to broker your loan to another lender.
While most of these are one-time fees, there are additional, recurring fees that may be charged multiple times. Watch out for case management fees, document managing, or archiving fees. And remember, these fees are added to the loan, with interest charged on the fees!
Now that you understand why the best lawsuit loan charges a low, simple, non-compounding interest rate with no fees. So, how do you get one?
Getting the Best Lawsuit Loan Deal
The difference between the best lawsuit loan and another may add up to many thousands of dollars for you or your lender. Therefore, it makes sense to put in the time and effort to get the best deal. These are the steps to take:
- Ask questions. Check the lender’s website, but don’t hesitate to call and ask your questions about interest rates, how they are figures, as well as any fees.
- Get it in writing. Information about fees and interest rates is worth nothing unless they are in writing.
- Avoid upfront fees. If a lender charges a loan application fee or any charge upfront, keep looking.
- Check the lender’s reviews. Previous borrower’s experiences with a lender are an invaluable asset when judging where to get the best lawsuit loan.
- Check out several companies. Take the time to investigate the policies and reputation of several lending companies.
- Run them by your attorney. The attorney handling your lawsuit should be an excellent resource for evaluating the quality of legal lenders. Share with your attorney the results of your research.
- Get quotes from several companies. Once you have narrowed down the list of lenders you’re considering, get firm quotes in writing from each. The best lenders won’t charge you a fee to apply for the loan.
- Negotiate. Once you have quotes from a few lenders that look good — negotiate for better terms. Let the company know you do your research and see if you cannot get them to agree to come down on their charges.
- Another round of questions. If you have any questions or concerns along your way to choosing a lender and negotiating for the best lawsuit loan, always ask. Be certain you fully understand all the terms and conditions before signing a loan agreement.
- Don’t be rushed. Borrowers typically want to get a lawsuit loan funded as quickly as possible because they need the money to pay their bills. Do not accept the lender attempting to hurry you into a loan.
Unfortunately, some legal lenders are ready to exploit your financial distress. Fortunately, there are reputable lenders who are transparent and forthright in their dealings with their clients. With the information above, you are now armed with the knowledge to find a trustworthy lender and the best lawsuit loan.
Why Choose Tribeca Lawsuit Loans?
Tribeca Lawsuit Loans provides pre-settlement funding for a wide range of civil cases in the U.S. We charge a simple, non-compounding interest rate, and no fees. Our loan application is straightforward, with no obligation, and absolutely FREE. Apply Now, or give us a call at (866) 388-2288, and we’ll be happy to help you get the best lawsuit loan for your unique circumstances.