Are you a victim of personal injury? Does your personal injury affect your daily expenses? If yes, then you must file for compensation or settlement for your personal injury. The results may take too long to come, but don’t worry!
We have a solution for you. Pre-settlement funds! Pre-settlement funds are legal funds for people who have pending lawsuits and are in need of urgent money.
Pre-settlement funding companies can provide people with the monetary support they need in exchange for a part of their future settlement. But how do these companies make money? How do they charge interest on the money they give you? The answers follow.
Most pre-settlement funding companies will charge a flat fee for their service. This fee is a percentage of the total amount of your settlement. When you win or settle your case, it is paid out of your settlement.
Lawsuits can often take several weeks to months to reach a settlement. Pre-settlement funding companies are designed to ease your financial pressure while you wait for your settlement to arrive. These companies provide lawsuit cash funding to support you through challenging times. The funds that they advance to plaintiffs come with a marginal interest rate. The interest rates vary depending on the company and the case but it can be 30% or more.
When contacting a pre-settlement funding company, ask the representatives how their company calculates interests. Some of the non-transparent companies may try to hide their fees. So read the fine print before signing the agreements.
What Is Pre-settlement Funding?
Pre-settlement funding is also known as lawsuit funding. It is a cash advance against a future settlement or verdict. The funds are provided in exchange for a part of the expected payout. The funding company receives its money back when the case is resolved.
Pre-settlement funding covers living expenses and other bills while you wait for your case to settle. It can also pay for medical treatment or hire expert witnesses. The funding company takes on the risk of your case not deciding, so there is no risk to you.
Interest rates on pre-settlement funding vary. Pre-settlement funding companies charge interest every month. They may be comparatively higher than traditional loans, but this is due to the fact that the funding company bears the risk of your case failing to settle.
Suppose you are considering pre-settlement funding. It is important to compare offers from different companies. Be sure to understand each other’s terms and compare the cost of borrowing.
Benefits of Approaching a Legal Funding Company
A pre-settlement company or legal funding company is a financial institution that provides funding to plaintiffs in personal injury lawsuits. Such funding can benefit a plaintiff in the following ways:
- Compensating lost wages. This litigation finance supports plaintiffs until their case settles. Personal injury lawsuits are often the results of severe injury, inability to work due to injury, and lost wages. The cash can ease the costs of medical bills and other living expenses.
- Hiring legal help. Pre-settlement funding is provided at a low-interest rate, saving plaintiffs money in the long run. This can be used to pay attorney’s fees which increases the chances of success in a case.
- Not like a traditional loan. In contrast, legal funding is not a debt. Legal finance companies do charge fees for the money they invest. However, repayment of the money is only necessary if the client’s claim is successful. If for whatever reason the lawsuit is unsuccessful, everyone disbands, and the client’s obligation to pay back the cash advance simply vanishes.
How to Get Pre-settlement Funding?
Pre-settlement funding companies typically charge interest on the outstanding balance of the loan. Some companies charge origination fees or other upfront costs besides interest. It’s important to compare the total loan cost from companies before choosing one.
The best way to get pre-settlement funding is to work with a company that offers competitive rates and terms. Shop around and compare offers before selecting a pre-settlement funding company.
Is Pre-settlement Funding Right for Me?
When evaluating pre-settlement funding, understand how these companies charge interest. Most pre-settlement funding companies charge a flat fee for their services. This fee is between 3% and 6% of the total settlement amount. Besides the flat fee, most companies also charge interest on the loan. The interest rate can range from 10% to 30%.
Also, to know if pre-settlement funding is right for you, you must know what to expect from your case as a settlement. A good idea of how personal injury settlements work can help you plan repayment of the borrowed money.
Estimating Your Settlement Amount
However, there are numerous types of funds you can choose for you according to your circumstances. We are mentioning some of them below to make you understand the different types of settlements.
- Taxable Damages.
This type of fund deals with punitive damages. Compensation for the victim’s injuries, medical expenses, and other losses is done through compensatory damages. When someone acts in a way that causes harm or death out of intentional, wanton, or recklessness, punitive damages may be awarded.
Punitive damages are meant to punish wrongdoing rather than “compensate” for the loss of a victim. They are rare, however, they could be given in addition to financial compensation.
- Non-Taxable Damages
Non-taxable damages cover several kinds of personal injury cases. These cases include:
- Dog attacks and bites
- Automobile accidents
- Medical malpractices
- Property Liability
- Product liability
- Defective medicines
- Workplace injuries
- Construction site injuries
- Wrongful death cases.
All these damages are non-taxable damages.
How to Get the Best Deal on Pre-settlement Funding?
The company and the case influence interest rates and fees. Some companies offer lower rates for cases they deem to have a higher chance of winning. Others may charge a higher rate if the case is riskier.
To get the best deal on pre-settlement funding, request quotes from various providers. When comparing quotes, ask about any fees or other charges that may apply.
Talking to an attorney before signing agreements is also a good idea. An attorney can help you understand the loan terms and ensure you get the best deal possible.
Also Read: How To Find A Public Adjuster For Your Insurance Claim In Pennsylvania
Take Away
There are a few ways that litigation funding companies can charge interest on the money they lend you. The most common way is to charge a simple interest based on the prime rate. Some companies may also charge a flat fee for their services, which will be added to the total amount you owe.
In other cases, the company takes a percentage of your settlement as their fee. Whichever way they charge interest, ensure you understand all the terms before agreeing.