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When facing a legal battle, the last thing anyone wants to worry about is how to pay for it. However, legal fees can quickly add up, and not everyone has the financial resources to cover them. This is where lawsuit funding and traditional loans come in. But which is the better option? In this blog post, we’ll compare lawsuit funding and traditional loans and help you decide which one is right for you.
What is Lawsuit Funding?
Lawsuit funding, also known as legal funding or settlement funding, is a type of financing that is specifically designed for those who are involved in a lawsuit. It’s a way for plaintiffs to get money upfront to cover their legal expenses while their case is ongoing. Lawsuit funding is often used in personal injury cases, but it can be used in any type of case where the plaintiff is seeking compensation.
How Does Lawsuit Funding Work?
Lawsuit funding companies provide cash advances to plaintiffs in exchange for a portion of their potential settlement or judgment. The amount of the advance is based on the strength of the case and the expected settlement or judgment amount. If the plaintiff wins the case, the lawsuit funding company is paid back from the settlement or judgment amount. If the plaintiff loses the case, they are not required to pay back the lawsuit funding company.
What are Traditional Loans?
Traditional loans are loans that are offered by banks or other financial institutions. They can be used for any purpose, including paying for legal fees. Traditional loans are often secured by collateral, such as a car or a home. They can also be unsecured, meaning that they are not backed by any collateral.
How Do Traditional Loans Work?
Traditional loans require borrowers to apply for the loan, provide documentation such as income verification, and undergo a credit check. If approved, the borrower receives the loan amount and is required to pay it back with interest over a set period of time. Traditional loans may have fixed or variable interest rates, and the borrower’s credit score can impact the interest rate they are offered.
Comparison of Lawsuit Funding and Traditional Loans
Now that we know what lawsuit funding and traditional loans are, let’s compare the two.
Speed of Funding
One of the biggest advantages of lawsuit funding is the speed at which funds can be obtained. Lawsuit funding companies can typically provide cash advances within a few days, while traditional loans can take weeks or even months to process.
Repayment
Another major difference between lawsuit funding and traditional loans is repayment. With lawsuit funding, repayment is only required if the plaintiff wins their case. With traditional loans, the borrower is required to pay back the loan amount plus interest regardless of the outcome of the case.
Credit Score
Lawsuit funding companies typically do not require a credit check, as the decision to provide funding is based on the strength of the case. With traditional loans, the borrower’s credit score can impact the interest rate they are offered and their likelihood of approval.
Collateral
Lawsuit funding is typically not secured by collateral, as the funding is based on the potential settlement or judgment amount. Traditional loans may be secured or unsecured, with secured loans requiring collateral such as a car or home.
It’s important to note that lawsuit funding can come with higher fees and interest rates compared to traditional loans due to the risk involved for the funding company. It’s important to carefully review the terms and conditions of any funding agreement before signing on.
Additionally, it’s important to only use lawsuit funding or traditional loans as a last resort after exploring all other options, such as payment plans with your attorney or negotiating with creditors. These options may be more favorable in terms of interest rates and fees.
When considering lawsuit funding versus traditional loans, it’s important to consider factors such as the speed of funding, repayment terms, credit score requirements, and collateral. Ultimately, the decision should be based on your individual needs and circumstances. It’s important to carefully review the terms and conditions of any funding agreement and explore all other options before making a decision.
Fast Funds is a lawsuit funding company that specializes in providing financial assistance to plaintiffs involved in legal cases. If you’re considering lawsuit funding versus traditional loans, Fast Funds can help by providing quick and easy access to funds while your case is ongoing.
One advantage of working with Fast Funds is the speed at which funding can be obtained. We can typically provide cash advances within 24 to 48 hours of receiving your application and the required documentation. This can help alleviate any financial stress you may be experiencing while your case is ongoing.
Additionally, Fast Funds does not require a credit check or collateral for our funding. The decision to provide funding is based on the strength of your case, so your credit score won’t impact your eligibility. And because our funding is non-recourse, you only pay back the advance if you win your case. If you lose your case, you owe us nothing.
If you’re considering lawsuit funding versus traditional loans, Fast Funds can provide a convenient and low-risk option for accessing the funds you need to cover your legal expenses. Our team is available to answer any questions you may have and guide you through the funding process.