The negative impact that a personal injury has on your life can compound quickly. On top of the pain and emotional distress that an injury causes, the financial ramifications of suffering a personal injury can spiral out of control and put you in dire financial straits.
You may find yourself unable to work for some time, which in and of itself poses immediate financial problems.
To make matters worse, aside from your normal living expenses, you likely have medical bills piling up while your ability to earn a living is restricted. If you file a lawsuit, you will eventually recover your damages, but that means little if you are in immediate financial distress.
If opposing insurance companies and attorneys know that you are hurting financially, they may weaponize that knowledge in settlement negotiations.
They may offer a settlement that does not even begin to cover all of the relevant damages and hope you’ll accept it.
After all, if you have bills to pay now, how can you wait for a better settlement offer?
If your case goes to court, how can you wait for the legal process to unfold as your bills pile up?
You may feel like your only choice is to take the lowball settlement offer in such a situation. Fortunately, you have options.
A Lawsuit Loan Can Help
If you find yourself in a situation like the one described above, a personal injury lawsuit loan can help you.
With personal injury lawsuit loans, you can fight the case to its best conclusion and take care of your immediate financial needs without letting bills pile up.
How Personal Injury Settlement Loans Work
A personal injury loan is different from a typical loan.
Personal injury loans, also known as pre-settlement funding, are a form of a non-recourse loan.
Most loans are recourse loans. If a borrower defaults on a recourse loan, a lender can seize any of a borrower’s assets to cover the loan’s cost.
A non-recourse loan specifies the collateral in the loan agreement. If a borrower defaults on a non-recourse loan, the only assets the lender can seize as collateral are those specified in the loan agreement.
In an injury loan, the specified collateral is a part of the lawsuit’s future settlement or judicial award. If you take advantage of personal injury funding, there is little risk. If you don’t reach a settlement or your case is not successful in court, you will not have to pay the lender back.
In this way, a personal injury loan can help you bridge the financial gap as your lawyer fights to get you the settlement you deserve.
How to Get the Lowest Rate on Your Personal Injury Loan
The most important thing to consider in taking on a personal injury loan is the interest rate.
Not all lenders are created equal, so here are ten tips on finding the lowest rate possible for your personal injury loan.
1. Speak With Your Attorney
If considering taking out a personal injury loan, consult with your attorney.
Your attorney may have worked with many lawsuit funding companies in the past. If they have, they can tell you which companies to avoid and which companies to speak with first. Your attorney may even have some insider knowledge of which lawsuit loan companies offer the lowest rates.
On top of connecting you with the right personal injury loan firm, your attorney can review any potential loan agreement to identify anything out of the ordinary.
2. Always Shop Around
When looking for an injury loan, always shop around. Don’t go with the first offer you receive because it’s the first offer you receive.
By shopping around, you can compare fees, rates, and customer service levels. If you field ten loan offers and the first one is still the best, then go with them.
Just make sure you shop around first.
Injury Wallet can help you find the lowest possible rate. We can shop around for you and connect you with lenders that can offer the best rate and loan terms for your individual circumstances.
3. Look for a Lowest Rate Guarantee
Many lawsuit loan companies offer a lowest rate guarantee, but not all of them do. If you feel that a certain personal injury loan offer is the best one but they don’t have the lowest rate, check if they have a lowest rate guarantee.
If they do have such a guarantee, they may be willing to lower their rate to match or outbid the lowest rate offer you get from a different lender.
4. Make Sure You Contract with a Reputable Lender
Unlike most other loans, there are no federal regulations on lawsuit loans specifically. This means that lenders do not have to maintain federal standards, so you need to watch out for disreputable firms.
Check reviews online of any firm you consider contracting with.
To find reputable lenders, you can also check with the American Legal Finance Association (ALFA). ALFA is a trade association for the legal funding industry. They set standards for their members that help ensure ethical lending procedures and transparency. ALFA maintains a code of conduct that all member companies must follow or risk losing membership.
Check to see if prospective lenders have an active membership with ALFA. A membership with ALFA is a good indicator of reputation in the legal funding industry.
5. Read the Fine Print
Always read the fine print of any contract before signing it. This is especially important with any form of loan. The fine print of a contract may contain hidden fees or worse. There may even be a hidden interest rate in the fine print of a contract.
If the details of a loan agreement indicate that you will have to repay the loan even if you lose your case, it is not truly a non-recourse loan agreement. Avoid such an agreement at all costs.
Personal injury lenders already have to get in contact with your attorney to approve your loan, so it should not pose a problem to have your lawyer review a prospective loan agreement on your behalf.
6. Use a Lawsuit Loan Calculator
Using Injury Wallet’s lawsuit loan calculator can help you find the best rate possible without the hassle of shopping around yourself.
Our lawsuit loan calculator will help you save time and money. It can be exhausting filling out applications and looking through potential loan agreements. You may miss an important detail of an agreement, so let us find the best rate for you with just one application.
7. Look for Hidden Fees
Always keep an eye out for hidden fees when you are looking for a personal injury loan.
Avoid any lender that requires an application fee. Look for language like “processing fee,” “administrative fee,” or anything similar. These are just ways to hide fees.
Hidden fees indicate that a lender is not committed to transparency. Transparency is key in personal injury settlement loan agreements.
8. Only Take What You Need
When you get a personal injury loan offer, take only the amount of money that you need. It may be tempting to take out a larger loan, but doing so will only mean that you have to pay more out of your settlement in the end.
If your case drags on and you find you need more money, you can contact your lender to see if they can provide additional funding.
9. Understand What Type of Interest Is Charged
To get the lowest rate on your injury loan, it is crucial that you understand the type of interest on the loan in addition to the rate of interest.
Simple interest is calculated based on the principal amount of outstanding debt and is the least expensive option—conversely, accrued interest and compounding interest increase over time. In addition to the type of interest, be sure to check if your interest rate is variable or fixed.
It is best to avoid variable interest rates on injury loans.
10. Understand the Restrictions on Lawsuit Loans
There are no federal regulations on lawsuit loans. However, certain states have their own legislation regulating lawsuit loans. These states include Illinois, Nevada, and Oklahoma.
To find out if your state has restrictions or other regulations on lawsuit loans, contact your state’s consumer protection agency or consult with your attorney.
If you keep these ten tips in mind, you can find the lowest rate for your personal injury loan. In doing so, you will save yourself money and avoid disreputable injury loan firms.
Be sure to check out our lawsuit loan calculator to save yourself some time!