Lawsuit Settlement Funding Rates
You may be wondering how much a lawsuit loan will cost. This is actually one of the most common questions we receive. Lawsuit loan rates can vary. The specifics of your case however, can play a significant role in the ultimate cost of your transaction.
How Risk Influences a Lawsuit Loan Rate?
More risky lawsuits generally warrant higher lawsuit loan rates. For example, a medical malpractice lawsuit in which a plaintiff must prove a physician deviated from the applicable standard of care will likely cost more than a rear end auto accident where liability is clear. This may not always be the case, however. A medical malpractice lawsuit loan is contingent on more factors than just liability.
You might believe lawsuit funding transactions with higher terms would be more profitable for lawsuit funding companies. This is not always the case.
Since lawsuit funding is non-recourse, losing a lawsuit is a total loss of the lawsuit funding investment for the funding company. Riskier cases therefore may not accurately account for increases in risk. Market forces are such that only certain lawsuit loan rates will be acceptable to clients. Therefore, deals with higher rates are less profitable for lawsuit funding companies because they lose more often. Lawsuit funding companies prefer transactions with the lowest possible risk. Transactions with the lowest lawsuit loan rates are actually most profitable.
So while we cannot predict what rate your specific case will warrant, we can state we will provide you with the lowest possible interest rate. This situation is in everyone’s best interest.
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Types of Lawsuit Funding Rate Structures
Lawsuit loans generally use two different types of rate structures.
Compounded
This type of lawsuit funding rate calculates the repayment amount by charging a monthly percentage rate. The next month that percentage rate is calculated on the previous month’s balance. Due to this method of calculation which charges interest on the balance and not original contract amount, this settlement funding rate structure is referred to as compounding.
Non-Compounded Lawsuit Loan Rates
The second type of lawsuit loan rate applies the percentage rate on the original contract amount in six-month periods. This type of rate structure is referred to as non-compounding. To understand the differences between the two, please see Lawsuit Loans – Getting Down to the Truth.
What Other Factors Influences Settlement Funding Loan Rates?
As stated above, lawsuit loan rates normally depend on factors related to your specific case. These include:
- The ability to prove negligence or liability.
- The estimated value of your case.
- How long your case is expected to resolve.
It is important to remember that lawsuit loan rates are not based on personal finances, consumer debt or credit scores. In fact, no credit checks are necessary for lawsuit loan funding because technically lawsuit loans are a sale of a portion of the future proceeds of your case. As such you are simply receiving an advance on expected “income”. These are not “loans” in the traditional sense of the word which implies repayment under all circumstances. For more on the differences between loans and lawsuit loans, visit Loans vs. Lawsuit Loans – What’s the Difference?
Preferred Settlement Funding Rates
There are many companies willing to advance cash on the potential proceeds of a lawsuit. However, Fair Rate Funding provides settlement funding to clients at lower “preferred” lawsuit loan rates than other companies in our industry.
Some of our competitors charge outrageous fees which can range from 3.50% to 4.99% compounded monthly. These large fees sometimes halt settlement negotiations or prohibit a settlement altogether.
Fair Rate Funding charges a “fair” rate of 18% of the contract amount every six (6) month period thereafter for preferred cases. We also provide a lawsuit loan price guarantee – if we approve your application and another legal funding company sends you a written contract to advance the same amount at a lower total cost, we will beat that deal or pay you $250 guaranteed!
Assumption of Risk
Lawsuit funding rates reflect the lawsuit lender’s assuming risk. Part of the non-recourse nature of these transactions is that the lawsuit lender takes on the complete risk of loss. That is, if for some reason you are not successful, the advance is not repaid at all! Nor are you personally responsible for repayment.
When you win your lawsuit, you pay back the portion specified in the contract. Fair Rate Funding contracts have no hidden fees and the repayment amount listed on the front page of the contract is what you repay.
Repayment Processes
The lawsuit funding repayment process is simple and stress free and normally works like this:
- You settle your case either through a verdict at trial or an agreed upon settlement.
- You sign a Release, or the court orders the defendant to pay damages.
- Your attorney receives a check or other deposit into an attorney trust account.
- Your attorney repays lawsuit cash advances and other liens on the file directly to those parties.
More Information on Settlement Loan Rates
You should keep in mind that understanding the facts about settlement loans can be a valuable undertaking. For example, there are absolutely no restrictions on the use of lawsuit loans. In other words, you can spend the pre-settlement funding money however you desire. To apply today for free, simply click the apply now button or give us a call and we will process your application.
Lawsuit loans can take as little as 24 hours to process. You can have up to $500,000 in your account to cover your expenses while your case is being litigated.
Thank you for your interest in lawsuit loan rates and the lawsuit funding industry.
