6 Pre-Settlement Funding Mistakes To Avoid
If you’re waiting on a personal injury accident settlement, you could be struggling to pay your bills and medical costs. A pre-settlement funding agreement could get you the money you need, but make sure you do your research and only work with legitimate companies.
Review the most common pre-settlement funding mistakes below, so you get the money you need without hassle.
First, let’s take a look at the major benefits of pre-settlement funding.
Benefits Of Pre-Settlement Funding
There are many advantages to consider.
First, if you are a plaintiff in a financial jam after a personal injury, getting settlement money in advance can keep the mortgage paid, the car in the garage, and food on the table. After all, many injured parties can’t work since they are recovering from a severe accident.
Second, a cash advance on your settlement may give your attorney more time to negotiate a fair amount. It’s common for insurance companies to drag their feet on negotiations and offer as little as possible. The tactic may be effective because you may need to cave and settle for a small amount out of financial desperation.
Third, you don’t need to pay back pre-settlement funding if the case doesn’t settle an award at trial. You and your attorney can apply for a lawsuit loan, knowing you won’t need to pay it back if the case doesn’t end favorably.
Not Shopping And Performing Due Diligence
When you are injured and waiting for a financial settlement, getting impatient with vetting pre-settlement funding companies is understandable. However, it’s critical to do your due diligence.
The effective interest rate and fees on lawsuit loans vary tremendously from company to company. Of course, the interest rate will always be higher than traditional lending, but some companies are significantly better than others.
Repaying Money You Didn’t Borrow
Some shady ‘lawsuit loan’ companies may try to scam you by trying to get you to pay for a loan that wasn’t finalized. Or, they could attempt to get you to pay back money that you didn’t borrow.
The company may even hire collection agents to pressure you to pay money back that you didn’t receive in the first place.
Remember, a legitimate pre-settlement funding company will document everything in a contract. For example, it will state how much money you borrowed, the rate, and the terms and conditions for paying it back.
Your personal injury attorney should review all documentation from the pre-settlement funding firm to ensure everything is on the up and up.
Not Reading The Fine Print
You need to be careful when signing an agreement with a pre-settlement funding company.
When the company agrees to fund your settlement advance, they will send paperwork to review and sign. Therefore, it’s essential to read the fine print.
It’s not uncommon for lawsuit loan companies to charge interest rates that rise as the case continues. With many companies, the interest can be in excess of 100%.
Fortunately, there are reputable pre-settlement funding companies that charge lower interest rates and even some companies that only charge a one time fee and zero recurring interest. Additionally, the best companies spell everything out clearly in the contract. Have your attorney review the document before you sign if you have any questions.
Not Understanding How Expensive The Loan Is
There are legitimate reasons to use pre-settlement funding, and plenty of good companies are out there that will treat you fairly.
However, you should never forget that pre-settlement funding is more expensive than traditional lending. That said, there are times when the injured person has no choice but to turn to a pre-settlement funding company to meet their financial needs. There are reputable companies in the US that can help you make ends meet while waiting for your case to conclude.
Thinking You Will Qualify But You Don’t
To qualify for pre-settlement funding, the company needs to see as much information about that case as possible. This means providing accident reports, medical documentation, doctor statements, and more.
It’s important to provide everything to the pre-settlement funding company as you can to get approved. But there are times when you won’t qualify for the loan.
This usually happens because the company doesn’t think you will get a settlement, or the settlement won’t be big enough to justify doing the loan.
Finding A Shady Pre-Settlement Funding Company
The US government doesn’t regulate the lawsuit lending industry, so bad actors are out there. It can be challenging to find good companies that treat their customers well.
One of the most common tactics of lawsuit loan companies is to charge you a rising interest rate the longer it takes the lawsuit to settle. Unfortunately, this process is entirely out of your control, and you could pay thousands more in fees if the case takes months to conclude.
You can find legitimate pre-settlement funding firms by checking online for reviews of the company you consider. Also, always ask your personal injury attorney for their recommendation.
Contact Capital Now Funding To Meet Your Financial Needs
When you need cash while waiting for your settlement, you may not know where to turn. Capital Now Funding is a reputable company that understands the needs of injured parties and their attorneys in personal injury lawsuits.
Capital Now Funding is different than other companies in this space. First, they charge a fixed fee with no recurring interest, so you know exactly what you will pay from the beginning.