What are Lawsuit Loan Fees?

OlufisayoApril 17, 202001,140 views

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Sometimes the worst part of an accident isn’t physical pain, it is financial loss. If you have been injured in an accident, you have probably gone to many doctor’s appointments and you may have missed time from work.

If you were struggling financially before a collision, the costs of having an accident can be devastating. If you are anticipating a legal settlement, you may want to take out a lawsuit loan, and if you do, you should understand the fees associated with it.

What is a Lawsuit Loan?

A lawsuit loan is a cash advance given in anticipation of settlement money. That money is lent for the purpose of keeping the lawsuit going. You can use the money to pay any bills you may have during the process of a lawsuit, including normal living expenses.

You will be able to apply for a loan after filing for a suit with the appropriate court. You will have to have legal representation to apply for such a loan. A lending company will use a formula to figure out how much money you are likely to receive as a result of the suit.

As with all loans, you would be required to pay interest or a funding fee. You will be expected to pay back the loan when you receive your settlement.

Lawsuit loans are only paid back if you are awarded a settlement or if a judgment in a lawsuit is awarded in your favor. If you do not get a settlement or if you lose a lawsuit, you do not have to pay back the loan or any fees associated with it; hence, it is considered high-risk.

You will not have to undergo a credit check for this type of loan, and you should get your money within a day or two. You will not have to put up any collateral and you should never have to pay back more than the entire amount of your settlement. Most people are only allowed to borrow about 20% of their estimated settlement.

How Much are the Fees?

A lending company will either charge interest on a loan or a funding fee. Interest rates may range between 20 and 60%. You may be able to reduce the cost if you find a company that charges a monthly “funding fee.”

The fees vary depending on how much money you are likely to receive and how long your lawsuit takes. A reputable company will provide you with a payback chart that will show you how much you will pay on top of what you have borrowed. You will have to pay back the entire amount of the loan plus the fees or interest.

Finding a Lending Company

It is important to find a lending company that is ethical and legitimate. Your attorney should be able to provide you with advice on finding a worthwhile financing company. A reputable lender should be very transparent with you when discussing the cost of your loan.

Although there is not a federal agency that regulates lawsuit loans, there are some self-regulation standards in place. The American Legal Finance Association can provide consumers with a purchase agreement to be signed by the lawyer, the lender and the client. Only four states have official laws regarding legal loans.

These states are Oklahoma, Vermont, Indiana, and Tennessee. You should ask a potential lender to provide you with testimonials from former customers.

If you are considering taking out a loan to help fund a personal injury lawsuit, You can learn more here.

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