There are dozens of financial products available. The most common ones are designed to help you to manage your cashflow. For example, if you cannot afford to buy a car to get to that new job you just landed you can take out a loan. Pensions are there to enable you to save for when the flow of money coming into your household slows because you are no longer physically fit enough to be able to work or are retired.
For the most part, we are all familiar with these kinds of financial products. But, here is one I bet you have never heard of – pre-settlement financing. If you don’t know what it is, please read on. Below, I explain more and how it might benefit you to better manage your finances if you have been seriously hurt in an accident.
What is pre-settlement financing?
Simply put pre-settlement financing is a loan that is designed for people who are claiming compensation to use until their case is settled. Effectively the payout is being used as collateral for the loan – see the Silver Dollar Financial website for more detailed information on pre-settlement financing.
How the process normally works
Each provider handles things slightly differently. But, normally what happens is that you approach them and share the details of your case.
This enables the finance firm to make sure that you have a strong case. One that means that your payout is big enough to cover your loan, the fees and interest.
Provided they are satisfied, you sign a contract with them, and they give you the money. Once your compensation comes through, the money they lent you is typically paid back, along with any interest.
Why you might want to consider this form of financing
Sometimes it is the only way – for example, how many of us would own our own homes if we had not been able to secure a mortgage. The answer according to a recent study carried out by Harvard University is very few of us. Loans can give us a helping hand going forward.
If you have had an accident and been hurt badly enough to be able to seek compensation for your injuries, the chances are you cannot work. If you cannot earn covering your medical and day to day bills becomes impossible. In that situation, being able to use your compensation payout as collateral for a loan can be a great relief.
Regardless of why you need to borrow money or how you do it, you absolutely think, research and plan. Take the time to identify all of the costs and always ask what happens if, for some reason, you cannot pay that loan back. Provided you do that you will be making an informed decision going forward.