Sometimes the time a settlement check takes to be issued is enough to drown an injured victim or an unemployed person in debt.
Lawsuits take ages to reach a conclusion, and insurance companies may drag the cases out for years, hoping for you to lose interest or for the case to disappear in thin air.
That’s why many people seek settlement loans for cash to be able to get back on their feet until they can lay their hands on their compensation funds. It seems like such an appealing idea; however, there is much information you need to be aware of before you commit to these loans. So, here’s everything to keep in mind.
What Are Settlement Loans?
A settlement same day loan for bad credit isn’t a loan for centrelink per se but rather an advance fund that you can take out on the settlement money you’re expecting to get after the lawsuit is resolved.
It comes in many forms, and each lender or lawsuit funding company refers to such loans by different names, including lawsuit loans, litigation funds, and pre-settlement finances.
As we said before, lawsuits take time, especially complicated ones, and many people find themselves in need of fast cash to compensate for insufficient income or pay their overflowing bills.
The purpose of a settlement loan instant is to help victims, and their families get through difficult times by laying their hands on a portion of their expected settlement money before the due date.
How Do Settlement Loans Work?
Whatever the reason behind your lawsuit, you can file for a settlement loan, whether it’s for a personal injury, a car accident, workplace incident, or medical malpractice. Even the heirs of a deceased person can borrow money against a civil rights discrimination suit.
But is it really that easy? No! After all, lenders need to secure themselves from losses, so they won’t grant you the loan unless they’re pretty sure you’re a successful case.
Upon receiving a loan application, lawsuit funding institutions will study and evaluate your case, weigh your chances of winning, and the amount of time it’ll take your lawsuit to reach a settlement. If they find a strong likelihood that you’ll win the settlement money, they’ll accept your application.
The loan’s amount will depend on the amount of money you’re expected to receive from the settlement after the legal fees are deducted, including the attorney fees and litigation expenses.
Once you receive the loan, you can use it the way you like without any restrictions. Also, the funding company won’t obligate you to repay the fund until your settlement money is issued.
What Happens If I Lose My Lawsuit?
Even if lending institutions take all precautions and accept only the winning cases from their point of view, there’s still a chance that these cases may lose. So what if you lose the case or the settlement money turns out to be less than expected?
In case you lose, you’re not obliged to repay the loan. For this precise reason, lenders evaluate your legal position and court proceedings thoroughly before they come to a decision.
Settlement short loans are a risky business for lenders, so they don’t accept applications on a whim. That’s also why they charge you lots of fees and skyrocketing interest rates in the process.
Similarly, suppose you win less than the expected amount of money. In that case, they have the right to collect all the cash left after covering the attorney’s fees, litigation expenses, and medical liens if you received medical care in the middle of a personal injury lawsuit.
Are Settlement Loans Worth It?
At this point, you might think that the road to a bond loan Queensland is a straight and obstacle-free one. While the process of getting a settlement emergency money loan is easy in itself, the roadblocks and potholes appear after you get the loan.
To avoid any future financial burdens, you have to be aware of the pros and cons of borrowing against a future settlement.
Pay for Your Urgent Expenses
A settlement loan is your best way to keep your head above water until you recover from your injury or find another job. Until you get your settlement check and stabilise your overall financial situation, you can use the loan to bridge the gap in your finances.
Whether it is to pay off your late rent, cover your medical bills, or fix your vehicle, you can use the money as you wish.
More Time to Get the Best Settlement
Sometimes rushing into a settlement may take away from your chances of getting a better deal. The current lack of income may be pushing you to accept whatever you can get, even if it’s not a fair settlement.
With a settlement loan, you can bridge the gap in your finances temporarily and give yourself some breathing space in which you and your attorney will have enough time to negotiate a better deal.
No Credit Checks
The eligibility criteria for settlement micro traditional loans differ completely from standard loans. While a satisfactory credit check is essential to be approved for a personal loan and guarantee convenient terms and rates, it’s of no value in the application process of settlement hardship loans.
Your chances of taking out a settlement loan with bad credit are equal to your chances of getting a loan with a spotless one. What matters the most is your probability of winning.
After all, your financial history is of no use to the lenders since they’ll be getting their money back from your settlement money, not your bank account.
While the process of approving an application is rigorous and thorough, it’s not lengthy. In most cases, you can receive your funds within one or two business days after signing the paperwork.
Sky-High Interest Rates
Settlement bad credit financier loans are designed to relieve you from your financial stress for a while, but they can turn into a financial burden themselves.
As with any type of loan, pre-settlement funds don’t come for free. After all, they mean business to lenders, so they charge you high fees and rates in exchange.
Typically, the interest rates range from 20% to 60%, which can’t be considered low, especially when compared to pay day loans rates that don’t exceed 30% in the worst cases.
In addition, some lenders may grant themselves the right to a portion of your settlement fund or all of it since there are minimum regulations on such loans.
That’s why you need to be careful, read between the lines, and double-check that you understand all the terms and conditions before you sign a contract.
That’s another problem concerning the interest rates. As we said before, there is no guarantee that your lawsuit will be resolved any time soon. Some cases, especially personal injury cases, take months or even years to reach a resolution.
Suppose you’ve taken out a pre-settlement loan earlier in your case. Since the rates are collected monthly, you’re bound to pay the interest rate until you get your settlement money. In this case, the accumulated rates may further exceed the principle money you’ve borrowed in the first place.
Not All Cases Qualify
Yes, settlement loans neither require credit checks nor heavy eligibility criteria. However, your case has to be a winning case, at least in the lender’s eyes. That’s why you’re going to need lots of shopping around before you find a lawsuit funding institution that accepts your case, especially if yours is a complex one.
How Many Settlement Loans Can I Get?
Suppose you took out a small loan to get you by for a short time until you win a judgment, then found out later you need extra money to cover your medical bills. Or you need cash to make ends meet until you’re fully recovered and ready to work again. In that case, you can take out more than one settlement loan.
This is especially beneficial for plaintiffs whose cases are spending more time than anticipated in court. However, note that you’re allowed to take out as many settlement loans as you want against the same case, provided that their total doesn’t exceed 20% of the estimated settlement money.
For example, if you file for a settlement loan against 5% of the expected proceeds, you’ll still have the right to apply for future loans against the remaining 15%, be it two, three, or a hundred loans, for that matter.
Now, You’re in the Loop!
A settlement loan can be a good dream and a nightmare at the same time! Sure, it makes a good short-term solution for your financial situation, but if you consider the whopping rates and interest accumulation, it may not be the most appealing idea in the long run.
Also, with minimum regulations and consumer protection, you’ll be faced with many traps disguised in the form of life-saving loans. So as always, we recommend that you shop wisely and read the small font before you commit to any settlement loan.
Finally, if you’re sure about winning the case and getting a fair amount of money eventually but concerned about lawsuit funding companies taking a big bite of your settlement fund, you can always opt for a personal loan instead. These are good alternatives that charge you fewer fees, and if your credit report is clean, you can lay your hands on competitive interest rates.