If you’ve never heard of the legal loan process before, you’re missing out on something that could help you monetarily while going through the stress of a lawsuit. Those who suffer through personal injury and seek compensation from the person or company to blame sometimes have to wait for months if not years before seeing any money. While it’s going to vary depending on complications of the case, you’re likely going to have financial issues if you’re unable to work due to an injury. When you add in medical costs, you could be looking at a real financial burden while your lawsuit pends.
Legal loans help you acquire money to live on for a set period of time that goes by the assumption you’ll eventually win your lawsuit. When you do, the companies behind these loans will expect you to pay them back through the money you win. If you lose your case, you don’t have to pay a cent back.
That convenient scenario is one reason why you see so many legal loan companies in existence. Regardless, some people aren’t even aware these loans are available. While it sounds easy, it’s not always. You still have to go through the same scrutiny as you would with any loan.
What Legal Lenders Usually Expect from You
Before you can be considered for a loan, the lender checks to make sure you have a personal injury attorney. These lenders want to be certain you have a good lawyer that can potentially win the case for you. The risk the lender takes is giving you money and then your case being lost so they don’t get paid back.
In addition to the expected lawyer, these loans are only for personal injury cases where you suffer financial difficulty due to medical bills or physical impairment. If you have any other legal problem affecting you financially, legal loan companies will turn you down.
They’ll also review your case and see if the person you’re suing is actually able to pay back compensation to you. Some cases may involve suing someone who has no monetary means, or at least paying in very small increments. When suing a company, the chances are going to be better you’ll get larger compensation all at once.
How Much Money is Typically Loaned Out?
Many legal loan companies give you about 10% to 15% of whatever the settlement amount is expected to be. If you’re expecting a large amount of compensation in the six figures, this could be a substantial amount and enough to live on for a long time until the case closes. The loan companies will also go by how long they think the case could take, which is sometimes a guessing game.
Some of the Minor Negatives to Legal Loans
You’ll find some criticism of this loan process, despite helping many people. Some loan companies are out there that don’t disclose what their rates are. Those who don’t think through things carefully can be burned by this, as well as not asking more details about exactly how much they have to pay back. It’s why you should ask if you don’t see it in writing exactly how much of your settlement will go back to the lenders.
Despite those few negatives, it can easily be avoided with careful shopping around. Overall, the real benefit is that it buys time so you won’t have to settle early as many lawyers and companies want you to do. When you do that, the settlement money is going to be far less than what’s possible. With a loan, you can ride out the months or years it takes to get the compensation you truly deserve for injuries incurred from someone else.