How Can I Get a Loan While Waiting for a Settlement?
Civil lawsuits can take time to go through the process and finalize a settlement. In the meantime, plaintiffs often find themselves in a precarious financial situation. While facing these financial difficulties, many of them ask, “how can I get a loan while I am waiting for a settlement?”
If you find yourself in this situation, there are several options available to you. At Direct Legal Funding, we highly recommend that you apply risk-free for a lawsuit settlement loan. There are many advantages to obtaining a pre-settlement loan, which we will talk about in greater detail later on. But before we do that, we will go over some of the other pre-settlement funding options that you may have.
Exploring Pre-Settlement Loan Options
When it comes to getting a loan while waiting for a settlement, there are a number of different ways to get the funds that you need. Here are some of the options you may be considering:
Personal Loans
Personal loans are a popular option for those seeking a loan while waiting for a settlement. These loans are typically offered by banks and credit unions and can be unsecured, meaning they do not require collateral or secured, meaning that you would put up collateral for the loan, such as your home or a vehicle.
To be eligible for a personal loan, you will typically need to have a good credit score and a stable source of income. The exact requirements will vary from lender to lender, but you can expect to provide proof of income and a credit check as part of the application process.
Getting a personal loan can be difficult for civil lawsuit plaintiffs because even if they have good credit, they are often out of work as a result of the personal injury they have suffered. This means that they would likely not have the stable source of income required to qualify, even if they have some collateral.
Payday Loans
Payday loans are a type of short-term loan designed to help you cover unexpected expenses until your next paycheck arrives. These loans are typically offered by payday loan companies and are based on your income and employment status rather than your credit score.
There are two big problems with payday loans for those who are waiting for a settlement. First, as discussed in the previous point, personal injury litigants are often out of work and do not have a paycheck to borrow against. Secondly, the repayment period for these loans is typically very short, as in you will probably have to pay it back within a couple of weeks or so.
Pawnshop Loans
Pawnshop loans are a type of secured loan where you use an item of value, such as jewelry or electronics, as collateral for the loan. Pawnshops will give you a loan based on the value of the item you provide as collateral, and you can retrieve your item once you have repaid the loan, plus any interest and fees.
While pawnshop loans do not require you to show income or a credit check, they do require you to put up an item of value to use as collateral. And if you are unable to repay the loan during the allotted time period, you risk losing these items.
Peer to Peer Lending
Peer-to-peer (P2P) lending is an alternative loan option where individuals can lend and borrow money directly, without the need for a traditional financial institution. P2P lending platforms match borrowers with investors who are willing to lend money, and the platform facilitates the loan process, including the repayment of the loan.
Plaintiffs will face many of the same challenges with P2P lending as they do with personal loans from a bank or credit union. These loans require a good credit score and a stable source of income, which puts them out of reach for many litigants who are waiting for a settlement.
Cash Advances on Credit Cards
Credit card issuers like Visa and MasterCard allow users to take cash advances through an ATM or directly from a bank. This option can be a quick and convenient way to access cash, especially if you already have a credit card.
The problem is that credit card cash advances typically come with a relatively short repayment period, and while you are waiting for your settlement, it may be difficult to pay back the advance. This could put you into an even bigger financial hole and severely damage your credit score in the process.
Loans From Family/Friends
Borrowing money from family or friends can be a viable option for those seeking a loan while waiting for a settlement. This option can offer more flexible repayment terms and lower interest rates compared to other types of loans.
The problem for many civil lawsuit plaintiffs is that they don’t know anyone in their family or circle of friends who has the available funds to lend them. And even if there is a suitable lender, you may not want to go this route because of the risk of straining the relationship or even permanently damaging the relationship (with that person) if you are not able to repay the loan.
Lawsuit Settlement Loans
A loan through a pre-settlement funding provider such as Direct Legal Funding is one that is specifically designed to provide financial support to individuals who are waiting for a settlement from a lawsuit. Pre-settlement loans are provided by lawsuit funding companies based on the expected settlement amount.
To be eligible for a lawsuit advance, you must have an active lawsuit and you must be awaiting a pending settlement. You must also be working with an attorney who can verify some necessary details of the case in order to evaluate the likelihood that the plaintiff will recover compensation for his/her losses.
The Benefits of a Lawsuit Loan While Waiting for a Settlement
Pre-settlement loans offer a number of advantages for plaintiffs who are waiting for their cases to settle. These include:
- Quick Access to Cash: Pre-settlement funding provides quick access to the funds you need, allowing you to more effectively manage your expenses while you are waiting for your settlement.
- No Credit Check Required: Pre-settlement loans are based on the expected settlement amount from your lawsuit, so a credit check is not required.
- No Repayment Until Settlement: With a lawsuit advance, you do not have to make any payments until your lawsuit is settled, giving you time to focus on your case and recovery.
- Flexibility: Lawsuit funding is a flexible option, as you can use the funds for any purpose, including paying bills, medical expenses, or legal fees.
- No Risk of Losing Collateral: Unlike pawnshop loans or other secured loans, pre-settlement funding does not require collateral, so there is no risk of losing your assets if you are unable to repay the loan.
- Non-Recourse: Lawsuit settlement loans are non-recourse, meaning that you only have to pay back the funds you borrow if you win your case and recover compensation. If things go bad and you lose your case, you are not required to pay anything back.
Perhaps the best reason to apply for a lawsuit loan is what it can do for your case. If you are facing a cash crunch, then you are going to be far more motivated to settle quickly for an amount that is likely to be significantly less than what your case is worth. But if you take advantage of a lawsuit advance, you have a lot more financial breathing room, which allows you to patiently wait for a settlement that represents full and fair compensation for your losses.
Contact Direct Legal Funding Today to Get Started on Your Lawsuit Settlement Loan
If you need money while waiting for a lawsuit settlement, Direct Legal Funding is here to help. Call us today at 866-941-5588 or send us a message here to speak with one of our specialists and/or to apply for your loan risk-free.