How Do You Get a Pre-Settlement Loan?

A pre-settlement loan can help you pay your bills while you wait for your settlement to be awarded to you. Given that it can take over a year for you to get your money, this seems like an attractive option to many people. However, obtaining one can be a challenge if you aren’t sure what to look for in a lender. Find out the steps to take to get a loan to avoid paying more than you should on your pre-settlement loan.

Where Can I Get a Pre-Settlement Loan?

Pre-settlement loans are offered by dedicated funding companies that specialize in this type of loan. While your lawyer can’t lend to you directly, they can guide you to a loan company. Unfortunately, given the lack of regulation in this industry, some lenders will try to take advantage of people they seek to represent. You will want to conduct research on any company that you intend to work with before accepting an offer from them.

How Do I Qualify for a Pre-Settlement Loan?

Many companies will require you to have an attorney representing your case before they will offer you a pre-settlement loan. Your case must also be a type that they cover, as not every case will be one that qualifies. However, pre-settlement loans don’t require a credit check, making them attractive to many people who aren’t able to obtain other forms of financing. Some of the types of cases that are covered by pre-settlement loans include the following:

Many types of cases will be eligible to be covered by a pre-settlement loan, but as a rule of thumb, claims that involve medical costs and lost wages are some of the most common. However, your own circumstances are unique and your case might be eligible for coverage even if it’s not listed here.

Calculating loan interest charges

Speaking with a qualified legal professional can help you determine the best way to finance your case if you require outside funding.

What Are the Interest Rates?

Pre-settlement loans are largely unregulated and aren’t required to cap the interest rates they charge. Loans with compounding interest rates can easily have rates that are higher than a credit card or a payday loan. For some people, this makes them unattractive, but for others with few options, they are willing to accept the higher rates for cash now. However, it’s possible to obtain loans with simple interest, which will leave you with far less interest to pay off by the time your settlement is obtained.

Are There Alternatives to Pre-Settlement Loans?

If you don’t want to take out a pre-settlement loan, you can opt for pre settlement funding. This does not involve interest rates and lets you take a set amount of your potential settlement before the case is determined. You can pay less overall back to your lender should you choose this, but you will want to compare your options to find out which is best for your needs. Personal loans and loans from family or friends are another possible way to obtain funding for your case.

A pre-settlement loan can seem like it costs a lot by the time you pay off your interest and additional fees, but it could be the best option available to you to obtain the maximum amount from your settlement. Before agreeing to any type of financing, it’s important to carefully evaluate your options and to investigate the companies willing to offer you financing. Once you’ve done enough research, you can make the right decision to complete your case.

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