Factors That Affect Eligibility For Lawsuit Loans
In assessing whether you are eligible for a cash advance, the lawsuit financing company’s priority would be to determine how likely you will win the litigation and get the settlement. This is beneficial to you because, unlike applying for a bank loan, the lawsuit financing company does not care about your credit worthiness or employment.
After all, the lawsuit cash advance is repaid by the out-of-court settlement or from you winning the case.
Keep in mind though that you might receive less lawsuit cash advance than you request. This depends on the type of litigation.
Cost Of Lawsuit Financing
Similar to interest on a bank loan, there are costs to borrow from a lawsuit financing company. Lawsuit financing can be more expensive than bank loans.
However, there are few alternatives to lawsuit financing that offer the same benefits. A lawsuit financing company takes the plaintiff’s borrowings as an investment. They are banking on the fact that the plaintiff will succeed in receiving court settlement, in which case, the lawsuit cash advance amount is repaid to them together with a high fee or interest.
The main point being: Can you find a bank that would lend you money and ask that you repay it only if you win your court case? Obviously impossible!
Lawsuit Financing Sponsors
Common Terms and Costs of Lawsuit Financing
These are some common terms and costs to look out for:
Recurring Interest
Certain lawsuit financing companies charge a monthly fee on the cash advance to the plaintiff. This interest is higher than that of a bank interest rate.
Flat Fee
This is an agreed amount of fees, between the plaintiff and the financing company, to be paid when the case settles.
Do note that the amount of interest on lawsuit financing depends on the type of lawsuit and estimated amount in settlement.
Lawsuit Financing Info Guide