Being involved in a lawsuit that includes a settlement is exhausting, not just emotionally but financially. Chances are high you’re out of work, but this doesn’t mean the bills have stopped rolling in. After a lot of research, you’ve decided to use a lawsuit advance to help cover these costs.
But not all pre-settlement advances are the same. Choosing the wrong one could lead to financial ruin thanks to high interest rates that can be difficult to pay off.
So how do you choose the right pre-settlement funding company? Continue reading to learn expert tips to help you choose the best lender, no matter your unique situation.
Speak to Several Companies Before Deciding
Never go with the first company you speak to. Speaking to several companies before deciding isn’t only about finding the best rates. It also helps you figure out the industry average in your area, which is essential in finding a great deal.
Not a client, but an attorney? You can find info for attorneys throughout this article and elsewhere online.
Ensure They Offer Non-Recourse Funding
Non-recourse funding means you only pay the money back if you win your settlement. Ensuring this is part of your funding agreement will protect you from financial disaster later on.
Without non-recourse funding, you’ll be stuck paying back the money regardless. This is essentially just a personal loan and not a pre-settlement advance. Since your finances are likely already affected during your lawsuit, it’s essential to protect your assets in any way possible.
Look for Simple Interest Rates
All pre-settlement companies will provide interest rates for the advances they give out. But not all interest rates are equal. Some companies use simple interest, while others use compound interest.
Compound interest means more interest will build on what has already been applied to your advance. Simple interest is applied only on your original loan, which ends up being significantly cheaper in the long run. Look for a company that uses simple interest rates that amount to 25% annual or less.
Look for a Direct Pre-Settlement Funding Company
There are two types of lenders, direct pre-settlement funding companies and brokers. While some people don’t mind working with brokers, the other option is generally cheaper. Why?
Brokers usually work off commissions. This means they won’t be looking to get you the lowest rates. You may end up paying more because it means they’ll earn more.
Do You Have More Questions About Choosing a Pre-Settlement Funding Company?
If you want to choose the best company for your settlement advance, be sure to use the expert tips above. These will help you get the best rates and advance terms, no matter your unique situation. These tips can also help protect you if you don’t end up winning your settlement, or it’s not as large as you thought.
Do you have more questions about choosing a pre-settlement funding company?
Check out our other blog posts. You’ll find many other posts on related topics to help you learn more on the subject so you can make the most informed decision.