What to Look for in a Pre-Settlement Loan Company

Pre-Settlement Loan Company

Waiting for your lawsuit to settle so you get the cash you need? You may need to wait for months! If you need money today for medical bills, living expenses, and lost wages, you may want to consider a car accident loan. This type of financing is offered by pre-settlement loan companies and can be a lifesaver when you are waiting for the insurance company to settle your claim. 

But what should you look for in a pre-settlement loan company? The first recommendation is to cast a wide net. Contact several of these companies and discuss their fees and rates. The more specifics they offer, the better. Talking to the companies personally also lets you gauge their professionalism and customer service. 

Below are some critical factors to consider: 

Table of Contents

#1 Is Non-Recourse Funding Offered? 

If the company has non-recourse funding, you do not have to pay them back if you do not win your case. The pre-settlement loan company is taking a calculated risk that your case will result in a settlement. If it does not, you should not have to pay anything back. 

If your contract does not offer this, they are just offering loans that you need to pay back. You should find another company. 

#2 What Are Their Interest Rates? 

Most companies provide a range of interest rates. It usually depends on the size of the case and the company’s opinion on the likelihood of a favorable settlement. 

You should beware of a company that offers a range from one to three percent. That is a significant range every year and does not give you much of an idea of what you will end up paying in the end. 

#3 What Kind of Interest Rate? 

The options are simple and compounding. Simple means the interest rate is based on the principle the company advances to you. Compounding means the interest accumulates over time. You are charged based on this new sum. This makes a difference in what you pay back, especially if the case takes more than a year to settle. 

#4 Is It a Broker or Direct Company? 

A broker is a company that connects accident victims to various funding companies. They are the middleman. This is not always bad, but brokers get commissions. They are not always focused on getting you the best deal, but getting you to sign an agreement that gets them paid. 

If you have difficulty finding appropriate funding for your settlement, you may find a broker helpful. However, it is vital to agree on the terms before you work with the broker. Some funding brokers may charge you 20%, and that sum is rolled into the deal, so you are paying interest. 

#5 Beware of Lawsuit Loan Sharks

Loan sharks happen in this business. There are plenty of good, legitimate pre-settlement funding companies, but some bad actors prey on the uniformed. Some red flags you should watch for are as follows: 

  • A legitimate company understands you want to clear the deal with your attorney. They want to make the deal, but they want it done in a way that protects you. If you feel pressure to sign something without your attorney’s consent, walk away. 
  • If the company does not answer your questions about rates and fees, do not trust them.
  • If the contract confuses you, walk away. A legitimate contract should clearly state what you receive, what you pay back, the rate charged, and fees. If the math is too confusing for you to understand, do not sign the deal. 

The above advice will help you choose a solid pre-settlement loan company. 


Please enter your comment!
Please enter your name here