Anyone who is suffering from injuries caused by someone else’s negligence has the right to sue the other party. An accident can happen, and it can lead to financial problems in the meantime. Because of the accident, you may have to leave your job, or you have to take days off your work. All these will lead to no income and lost wages.
But in such a situation, you still have to pay for medical bills and the cost of living. You can get compensation if you have filed a lawsuit, but it is going to take months to settle. In such scenarios, people turn toward ways to get money for settlement. A plaintiff’s few options to get money for their settlement are traditional bank loans, cash from friends and family, or applying for pre-settlement funding.
Here, we are going to discuss the advantages to the plaintiff that pre-settlement funding has over traditional loans. But before we dive into pre-settlement funding vs traditional loans from the perspective of a plaintiff. Let’s first understand pre-settlement funding.
Pre-settlement Funding Overview
Pre-settlement funding is a financial tool for people who have a pending lawsuit in court, where they are the victim of injuries, malpractices, or other kinds of negligence. It is a cash advance that only the plaintiff can get, and it is not available to the defendant. Getting a pre-settlement loan is only possible if you have an attorney representing you in court.
Your ongoing lawsuit will determine whether you will get cash or not. The strength of the lawsuit plays a major role in ensuring whether you will get approval from a legal funding company. In some instances, pre-settlement funding is also termed as lawsuit funding, settlement funding and legal funding. Here, you are going to get the money against the expected settlement value in the future, and you need to repay it if you win. Now you understand what pre-settlement loans are, let’s not check out the advantages of pre-settlement funding over traditional bank loans.
Advantages of Pre-Settlement Funding Over Bank Loans
Getting a loan becomes difficult if a person is injured and forced to leave a job because of injuries. But that problem has been sorted out with the rise of pre-settlement funding. Why are we saying this? In recent times, we have seen millions of plaintiffs approaching legal funding companies to get cash advances against the lawsuits they have. Some of the key benefits that pre-settlement fundings have that bank loans don’t have are:
No Credit Check Required
Yes, pre-settlement funding companies will not ask for credit checks, as we fund your cases. However, banks will never approve your application without thoroughly examining your financial status. Since we offer cash advances against your lawsuit, we consider your ongoing lawsuit as collateral and cover our amount once you win the case. But banks can’t do that; they will ask you to submit physical collateral.
Further, we understand that an injury can impact your finances, even if it hurts your credit score, as you have no job and all your money goes into medical and legal bills. Therefore, pre-settlement funding is here to assist the plaintiff even if they don’t have a credit rating. The only thing we ask for is the strength of the case. If your case is strong and the case type is eligible, we can provide you with the money for your lawsuit.
Minimal Paperwork
The bank demands many documents to approve your application. They need your employment status, tax returns, bank statements, appraisals, and pay stubs. Getting a bank loan is almost impossible if someone is already in pain and needs money to cover medical bills. They don’t even give you funds if you don’t have any physical collateral to submit. On the other side, pre-settlement funding doesn’t require all of these; we only need your case documents, police report, and medical history. You don’t have to provide all of these; your attorney will oversee the documentation.
Applying with us is very easy. Provide your attorney details, and we will get all the information related to your case from them. Based on the strength of the case, we will provide you with money, which you can start using immediately.
Quick Access to Cash
Because very little paperwork and credit checks are required, we can quickly fund your case if our internal team finds that your case is strong. In pre-settlement funding, the company generally takes just one or two days to evaluate the case internally. But if you apply for a bank loan, the approval process can drag on for weeks. Further, if a pre-settlement funding company approves your application and you agree to the terms, you can receive the money in less than 24 hours of approval.
Flexible Use of Funds
Flexibility in how you use the loan amount is only possible with pre-settlement funding. Bank loans are for specific needs. Whether you take a home loan or a car loan, they are meant for a specific reason. Also, if you try to get a personal loan, they will want to know how you are using the money. If you want to use the money to pay for the litigation expense, the bank will definitely deny your application.
But with pre-settlement funding, you don’t have such restrictions. As we understand, while you are in a lawsuit, you can need money for several reasons. Either you need funds to cover the litigation expenses or money for medical assistance. Even you can use the pre-settlement funding to cover your day-to-day expenses. We are not going to restrict you from using the money. Once you get pre-settlement funding, you can use it however you want. But we are cautious about our clients using it wisely, as it is not free money. You have to repay once you win the case.
Risk-Free Finance Option
The most amazing part of pre-settlement funding is it’s risk-free for the plaintiff. No bank will offer you funds risk-free. A risk will always be attached to it, as you have submitted physical collateral. But here, with pre-settlement funding, you are getting money against your lawsuit. Therefore, if you win you pay, if you lose you don’t have to pay. Because of the zero risk, many plaintiffs consider pre-settlement loans over traditional bank loans.
However, the interest rate is one drawback of pre-settlement funding over a bank loan. Banks do have low interest rates in comparison to pre-settlement funding. But you have to understand that in the pre-settlement funding process, the lender is at complete risk of losing the money if you don’t win, hence the higher interest rate of such cash advance.
Now you know the advantages pre-settlement funding has over bank loans. So, you can make a correct decision by evaluating the pros and cons of pre-settlement funding. To make things easy for you, we have created a piece of information that can help you further. You can also check out whether settlement loans are bad for you. Here, you will get more detailed information about such financing options.