How to get the lowest rates on lawsuit loans
This article provides injured plaintiffs with actionable tips to help them seek better rates and terms on lawsuit loans. A full version of this lawsuit loan comparison guide is available here.
Why we wrote this
The pre-settlement funding industry has grown massively over the last decade. Unfortunately, regulation has not kept pace.
Pre-settlement lawsuit loans for injured plaintiffs are great in theory. Plaintiffs who are out of work as a result of their injury can get cash upfront to help them financially while an attorney helps resolve their legal claim. In contrast to typical loans, lawsuit loans are repaid if and only if a legal claim concludes in favor of the plaintiff.
The non-recourse nature of lawsuit loans is a major selling point, but comes with a cost – lawsuit loans are often not regulated as traditional loans. Usury laws often don’t apply. Pre-settlement funding companies are not beholden to the Truth in Lending Act.
While plaintiffs are protected in the event their case is not successful, lawsuit loan companies select cases that are likely to succeed. The sometimes astronomical rates charged are the true cost of these contingent financing arrangements.
How to compare lawsuit loans
The biggest hurdle to getting fair terms on a lawsuit cash advance is a lack of information. Most lawsuit loan companies don’t publish their rates and terms on the web. In fact, some funding companies won’t even tell you their rates and terms if call and ask. Instead, they’ll provide a range of terms that gives plaintiffs no actionable information.
That doesn’t mean it is impossible to get the information you need to make an informed decision, it just means that you have to do your homework and make a few more calls.
Here’s our overview of how to get the best rate possible.
1. Figure out how much pre-settlement lawsuit funding you need
The first step is to figure out how much funding you’ll need to see you through to the end of your case. Talk to your lawyer about how long they expect the case to take. Figure out how much funding you need on a monthly basis to cover your most important expenses. You can arrange recurring funding with some companies, but for comparison purposes, try to come up with the total amount of funding you expect to need.
2. Find reputable legal funding companies and make a list
There are a couple of good ways to do this. Ask your attorney for recommendations. Search online using your favorite search engine for “lawsuit loans.” You can also use a lawsuit loan companies directory like the one on CompareLawsuitLoans.com.
Regardless of how you find the companies, for each company, look for any complaints on BBB, Yelp, and Google. Many companies pay plaintiffs or otherwise encourage them to leave favorable reviews. Look for the one-star reviews to see what complaints plaintiffs had in the past.
Once you have a list of five to ten reputable lawsuit funding companies, you can start reaching out to them.
Some of the largest pre-settlement funding companies are:
- Thrivest Link Legal Funding
- US Claims
- Oasis Financial
- Glofin or Global Financial
- JG Wentworth and Peachtree Financial Solutions
- Cherokee Funding
- Momentum Funding and LawCash
These are just a few of the many companies that provide funding.
3. Call each funding company on your list and get a binding quote, in writing
As mentioned above, not every company will agree to do this. That’s ok. Your goal is to find two to five lawsuit lending companies that will provide a binding quote without any case information from your attorney. You want to ask each company for the same amount of money and make sure the quote includes all fees that will be charged. For example, ask for a quote on receiving “$5,000 cash in my pocket after all fees are taken out.” Each quote should show, at minimum, the following items:
- The amount of cash you receive in your pocket after all fees
- The interest rate charged, and whether it is charged on a simple or compounding basis
- All fees associated with the transaction
- A payoff schedule that shows how much is due at six-month increments for at least three years
4. Compare the pre-settlement funding quotes
Now that you have apples-to-apples quotes, compare to see which is the cheapest. Some might be cheapest earlier on and be more expensive as time progresses. If it is tough to tell which quote is better for you, you can use a lawsuit loan calculator or comparison tool to help you visualize the difference between the quotes.
5. Leverage your leading offer to get lower offers from the other companies
This one is pretty self-explanatory. Once you have the best offer selected, let the competitors you reached out to before know that you have a better offer. Ask if they can beat the terms. Get another binding offer for the same amount from any companies that say they can.
6. Choose two or three pre-settlement loan companies with the lowest rates
Now you should have a few quotes to choose from. You should move forward with the companies that provided quotes with the lowest rates. Provide the legal funding companies your attorneys’ details so that they can get in touch with your attorney.
Let your attorney know specifically which companies you are moving forward with. Tell your attorney that you do not want them to share your case information with any company aside from those specific companies you chose.
7. Once you get a contract, make sure it matches the quote you received in step four
Once you get approved for funding, make sure that the quote you were provided before matches the contract you’re signing. Sometimes, companies make mistakes. You are your own best advocate here, as always.
8. Get something in writing from the funding company about terms on future fundings
If you suspect you may need additional lawsuit settlement loans in the future, make sure that the terms will match those of your existing contract before going forward with signing. The last thing you want is to get the bait-and-switch.
Once you’re approved for a specified amount, you can also ask about breaking it into smaller fundings over time - this can help you save money especially if you’re not sure when your case might settle.
Conclusion and takeaways
This guide will help you save thousands of dollars on legal funding. It should take less than an hour to go through the steps.
The biggest mistake you can make with legal funding is not taking the time to do your research and compare quotes. Lawsuit loans are by and large expensive, but there are companies that charge fair rates.
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