How Is a Lawsuit Loan Different From a Conventional Loan?
Lawsuit loans differ in almost every aspect from a conventional or bank loan. In reality, a lawsuit loan is not a loan in the technical sense of the word, it is more like a cash advance.
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Eligibility
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Anyone may apply for a conventional loan as long as the financial institution offers the type of loan you want, such as a mortgage, auto loan or personal loan. To qualify for a lawsuit loan, you must have a pending lawsuit involving monetary compensation.
Loan Amounts
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How much you can borrow with a conventional loan depends on the type of loan, your individual credit rating, the value of your collateral, if required, and internal bank policies. Lawsuit loans are a cash advance based on a percentage of the anticipated full settlement amount.
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Approval Process
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A conventional loan requires a loan application, credit check, employment verification, and, depending on the type of loan, payment of loan origination and servicing fees. In contrast, a lawsuit loan requires only an evaluation of the likelihood that you will receive a settlement amount.
Repayment
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Repayment is always required in a conventional loan, while repayment of a lawsuit loan is contingent upon winning the lawsuit and obtaining a settlement. If you receive a lawsuit loan and receive no settlement, you owe nothing.
Cost
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Conventional loans are less expensive than lawsuit loans. Although factors affecting the interest rate, such as the type of loan and your credit rating, can make a conventional loan seem expensive, the cost basis for a lawsuit loan is a high-premium, assigned risk factor. The higher the assigned risk of your lawsuit loan, the more you will pay for it.
Considerations
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You can find companies on the Internet that specialize in lawsuit loans. Use caution and thoroughly investigate any lawsuit loan company you are considering. You should ask your attorney for recommendations before starting your search.
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References
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