If you were in an accident and are now in the middle of a personal injury lawsuit, it’s possible you’re short on money. You may be dealing with insurance companies and hospitals that are demanding payment, or you could be struggling because your injuries required you to take an extended amount of time off work. If that’s the case, you may be asking yourself if you should get a personal loan while waiting for lawsuit funds.
Requesting and receiving money through a financial institution like a bank is something most people do at some point in their lives. If you’re thinking about going down that road, it’s important to understand what the process is like. It’s also important to recognize that you have other options. At Preferred Capital Funding, we offer plaintiffs lawsuit funding in the form of a cash advance. It’s important to understand how the different forms of funding work, so you can choose what’s right for you.
The Personal Loan Process
Personal loans are obtained through banks, credit unions, and online lenders. The money a person receives is a fixed amount that’s repaid over a set amount of time. Money borrowed in this way is subject to an interest rate. The rates fluctuate depending on a number of factors, including credit score, income, and the presence of a cosigner. The higher the interest rate, the more you pay back.
To receive a personal loan, there is an application process. Many borrowers allow potential lenders to submit an application online. They’ll need verification of your income, typically in the form of check stubs or your latest tax return. You’ll also need to tell them how much money you’re requesting, and they’ll perform a credit check.
In addition to the interest rate, there are some fees to watch out for. Common fees associated with this type of funding include origination fees and prepayment penalty fees. Origination fees are issued to process the application. For example, if you’re charged a 1% origination fee on $10,000, you’d only receive $9,900. Prepayment penalties often seem counterproductive to borrowers because they only apply if you pay back what you borrowed early. If you decide to go with a personal loan, it’s imperative to verify what fees you’ll be looking at, or you could be short on funds to make it through your lawsuit.
Choosing the Funding Option That’s Right for You
Your situation will likely determine the best funding option for you and your family. While traditional forms of funding can be useful as the interest rate and fees have the potential to be lower than pre-settlement funding, paying the bank back isn’t always easy. If you miss a payment or try to defer, you could run into more financial trouble.
With lawsuit funding, repayment operates differently. Instead of paying the funding company back in installments, you don’t have to worry about repayment until you’ve won your case. In most cases, your lawyer will receive your compensation check, and they’ll take care of ensuring their legal fees and your funding is managed properly. You’ll receive the remaining portion and you won’t have to worry about any outstanding balances.
Another benefit of receiving a cash advance from a lawsuit funding company is the potential for the funding to be nonrecourse. While this option is only available in some states, there’s a chance your funding will only need to be repaid if you win your case. With traditional funding, you need to find a way to pay the institution back, win or lose, or face possible financial ruin.
While banks look at your finances to determine if you’re eligible for money, we only take into consideration the validity of your case and whether your lawyer is willing to work with us. If we believe you have a strong chance of winning, we’ll provide you with the funding you’ve requested. If your case doesn’t go well, you won’t owe us any money back.
Preferred Capital Funding Can Help
While we can provide you with information on how pre-settlement funding works for our clients, it’s important to sit down with your attorney and discuss funding options and what’s right for you. Factors like the type of personal injury lawsuit you’re dealing with, the predicted outcome, and how much money you’re seeking can impact what option is best for you.
If you think lawsuit funding is for you, submit an online application with us today. When you apply with us, you could have your money in as little as 24 hours. Get in touch with our funding experts today to learn more.