With a settlement loan, your clients can get immediate access to the money they need to cover medical bills, replace their income, and deal with personal expenses – rather than waiting for the full settlement to come through. But if you’re like a lot of lawyers, you’re skeptical about the arrangement. You don’t want your clients to face predatory lending practices or deal with high interest rates that can leave them in a worse financial position than they were in before.

However, not all settlement lenders operate unethically, and not all settlement loans are financially destructive. In fact, the right settlement loan can be a massive boon for your clients, with minimal downsides.

So how can you tell if a settlement loan is “worth it?”

Factors That Make a Settlement Loan Worth It

If these conditions are present, a settlement loan is likely the right financial move for your client:

1. A lengthy settlement process. First, you’ll likely be staring down the barrel of a long settlement process. If you suspect you’ll be able to reach an agreement quickly, and get the settlement money to your client in a couple of weeks, you may not need to think about a settlement loan. Unfortunately, most cases don’t go this smoothly. In most cases, negotiations are protracted and challenging, and even after you reach a final agreement, it could be weeks, or even months, before your client gets their money. A settlement loan will bridge the gap and help your client make do in the meantime.
2. Lack of income. If your client is seriously injured or if they’re otherwise debilitated, they won’t be able to work – which means they won’t have any income to pay for their expenses. It’s true that you’ll be able to recoup some of these losses, since most settlements account for lost wages, but if the settlement money is weeks away (or longer), your clients will be in a tough spot. If your client is still working, or if they have ample personal savings, the loan may not be as necessary.
3. Mounting bills. Talk to your client about the bills they’re facing. Chances are, they’re dealing with incoming medical bills for their ongoing treatment and recovery. On top of that, they’ll still be responsible for paying their mortgage, utility bills, groceries, and other regular expenses. If it’s getting harder and harder for them to make ends meet, a settlement loan could be exactly what they need.
4. Client stress. You’ll also need to think about the level of stress your client is facing. If they don’t seem worried about their financial situation and they’re taking things in stride, they may not need pre-settlement funding to help them close the gap. But to a client who’s suffering from extreme stress, a lawsuit loan can be a lifesaver. If your client is wracked with uncertainty and anxiety, this loan could fill them with confidence about the case’s future – and give them the money they need to stay in financial control.
5. A fixed fee (rather than an interest rate). Interest rates aren’t necessarily a bad thing, but they tend to work in the lender’s favor. Over time, a borrower facing a steep interest rate will see the amount of money they owe grow to absurd proportions; due to compound interest, the borrower may end up owing far more money than they originally borrowed. You obviously don’t want your client to suffer any more financial strain than they have to, so it’s wise to avoid lawsuit loans with high interest rates. Fortunately, Capital Now Funding only offers loans with a one-time fixed fee – so there’s no interest, and you’ll know what they’ll owe up front.
6. Reasonable rates. Regardless of the structure of the loan your client gets, whether fixed fee or interest bearing, just make sure it is reasonable considering the circumstances. If the lawsuit loan is excessively expensive.  Lawsuit loans are more expensive than traditional lending because all loans are non-recourse.  Just make sure your client has a cap on the payoff amount.  This way if the case goes longer than expected, there is no risk of the settlement loan payoff increasing to an amount that could put the settlement in jeopardy.
7. Speedy, straightforward approval. Your client is already dealing with a lot of stress and uncertainty. They don’t need the extra strain of going through a lengthy approval process. Ideally, your client will be able to fill out an application in a matter of minutes and know within a day or two whether they’re approved for a lawsuit loan. The best lenders work quickly to expedite the process and get money into borrowers’ hands faster.
8. A reputable lender. If you’re looking for a lender with a reasonable rate, a fixed fee, and a speedy approval process, you’ll already be on the right track to finding a reputable lender. But you’ll still need to do a bit of homework. You’ll want to be sure that this company will reliably and quickly dispense funds, that they don’t have hidden fees, and that they’re willing to work and communicate with you. Check out reviews and do your research before you decide on a settlement loan provider to recommend.
9. Open communication. Communication is key if you want to facilitate a successful settlement loan for your client. Open communication gives you a chance to get your questions answered, learn more about the settlement loan process, and put your worries to bed. If you can’t get in touch with anyone, or if communication is dodgy, look for another provider.
10. Clear, simple terms. Complicated terms and busy fee schedules complicate an otherwise simple lending process. Settlement loans are much more valuable when they come with clear, simple terms that anyone can understand in a matter of minutes.

A Brighter Future for You and Your Client

With happier, less stressed clients, you can continue performing your best work, earning more referrals, and ultimately, helping your firm grow. If you’re interested in getting more details about settlement loans, or if you’re ready to apply with a client, contact Capital Now Funding for more information today!