Lawsuit got you strapped for cash? In Florida, there are loans you can get based on your expected lawsuit win. These are called lawsuit settlement loans.
Although these pre-settlement loans in Florida can be beneficial in the short run, it’s necessary to learn how they operate, particularly when it comes to interest rates.
What are Florida Lawsuit Loans?
Florida lawsuit loans are a type of non-recourse financing. This means you only repay the loan if your lawsuit settles favorably. The lender advances you a portion of your potential settlement amount upfront, helping bridge the financial gap while your case progresses.
How Do They Work?
- Application: You approach a lawsuit loan company with details of your lawsuit.
- Evaluation: The company assesses your case strength based on factors like liability and potential damages.
- Approval & Advance: If approved, you receive a cash advance, typically a percentage of your projected settlement.
- Repayment: When your case settles, the lender recovers their advance plus a fee (interest) from your settlement proceeds.
- No Repayment if You Lose: If your case is unsuccessful, you owe nothing.
Interest Rates on Florida Lawsuit Loans
Unlike traditional loans with fixed interest rates, Florida lawsuit loans use a factor rate. This multiplies the advanced amount to determine the total repayment due. The factor rate considers your case strength, potential settlement value, and processing time.
Here’s an example:
- You receive a $10,000 advance
- The factor rate is 1.2
- Your total repayment would be $10,000 x 1.2 = $12,000
The effective interest rate on this loan depends on how long it takes to settle your case. The longer it takes, the higher the effective interest rate becomes.
Important Considerations
- High Costs: Factor rates can translate to very high effective interest rates, especially for long-lasting lawsuits.
- Impact on Settlement: Large fees deducted from your settlement could mean a smaller final payout.
- Alternatives: Explore options like negotiating with your attorney for extended payment terms or seeking temporary financial assistance programs.
Consulting with your Attorney is Essential!
Although USA Settlements Loan have high costs, lawsuit settlement loans in Florida might provide short-term assistance. Talk about this option in detail with your attorney to see how it may affect your case and your budget. We can help you explore best solutions that might be most suitable for your situation.