Searching for Car Accident Lawsuit Loans
Car accident lawsuit loans are financial transactions in which a lawsuit funding company advances money to a personal injury plaintiff who sustained injuries as a result of a car accident. The injured party/plaintiff/claimant pledges a portion of the future proceeds of the settlement, if any. Because lawsuit funding agreements calculate the amount of repayment using interest, they are sometimes referred to as car accident loans.
This is actually a misnomer because the transactions are not repaid in the event a recovery is not obtained. In other words, if the plaintiffs do not win the case, the car accident loan is not repaid and the lawsuit funding company has no recourse against the plaintiff.
Below we describe the basics of car accident loans – what they are; why we need them; how they are structured; and discuss the source of opposition toward these unregulated financial transactions between free parties.
The Demand for Car Accident Loans
Lawsuit funding enterprises offer car accident loans to injured victims who need an immediate influx of cash to pay expenses while their claims remain pending. Injured parties are often unable to work after their accidents. Car accident loans are just one response to this problem. They are popular because they solve litigants’ short-term cash flow difficulties.
Pursuing a case against financially strong insurance companies is a daunting task. The inability to pay monthly expenses puts more pressure on these victims. Cases can last for years in litigation, depending on the venue and a host of other factors. As a result, many plaintiffs simply accept “low-ball” settlement offers simply because they have no other choice. Car accident loans aim to solve this problem.
Car accident loans are processed within days and plaintiffs get much needed cash almost immediately. There are no restrictions on the use of the car accident loan proceeds so plaintiffs can use the money however they want. Most use the money to pay utilities, rent, car payments, insurance premiums, child support, or medical treatment. Car accident loans are a flexible liquidity option for car accident plaintiffs immediately.
Car Accident Loan Alternatives
Auto accident plaintiffs normally turn to car accident loans AFTER they have exhausted all other sources of funds. By the time clients seek funding, they’ve already asked family members and friends for loans, cashed in savings and/or retirement accounts, obtained mortgages on their home(s), sold other nonessential items or any other way to raise money.
Car Accident Lawsuit Loan Uses
Although there is no specific requirement dictating how to use a car accident loan, most clients use the cash to pay bills. The vast majority only seek lawsuit loans to endure the long, drawn out litigation process.
In certain instances, however, car accident loans can be used to enhance the value of a case. For example, car accident loans can be used to pay for additional medical treatment if there is limited or no available insurance coverage. Surgical lawsuit funding pays the medical provider directly so the client can get the treatment he/she needs. The cost is then placed as a “lien” on the file and is repaid only if the case is successfully resolved.
Consider also using lawsuit funding to pay for 3D rendering of positive MRI studies. 3D Magnetic Resonance Imaging (MRI) renderings offered by Multus Medical, for example, are patient specific animations of MRI data regarding positive studies. That is, if an MRI shows some sort of abnormality, a 3D rendering will be able to illustrate the condition as a movie. These are used by personal injury attorneys as demonstrative evidence at trial so that juries can better understand the medical condition.
Ultimately, whatever the use, car accident lawsuit loans can be very valuable in paying expenses, getting additional medical care, or enhancing the potential settlement value of a lawsuit. Any expenditure which benefits the plaintiff can be a worthwhile use of the car accident settlement loan.
Car Accident Settlement Loan Fundamentals
Lawsuit funding transactions provide immediate funds to plaintiffs. In exchange, plaintiffs pledge a portion of the future settlement proceeds of a case, if any. Upon successful resolution, the advance is repaid. This repayment is based upon how long the case takes to resolve and whether the case is ultimately successful.
Typical loans are theoretically repaid under all circumstances. If the loan is not repaid, the borrower defaults. Car accident lawsuit loans however, are contingent upon the success of a particular lawsuit. If the plaintiff does not receive any monetary compensation, the car accident “loan” is not repaid. Thus, lawsuit loans are not actually loans at all.
Instead, lawsuit loan transactions are a sale of property rights in the future proceeds of the lawsuit. If there are no proceeds, the client is not obligated any further.
Car Accident Attorneys Must Cooperate
Processing lawsuit loans for car accident cases requires attorney cooperation. The process goes something like this:
- An application is completed
- The funding company requests relevant documents from attorney
- Funding company reviews documents and contacts attorney for a conference call
- Lawsuit loan underwriter and attorney discuss issues surrounding the case
- Case is approved
- Contract is prepared for signature
- Client signs and returns documents
- Attorney signs and acknowledges the transfer of a portion of the future settlement
- Client is funded
As you can see above, plaintiff’s attorney is an integral part of the lawsuit funding process. Without attorney participation, there is virtually no chance a client will be able to secure lawsuit funding in car accident or other types of lawsuits.
Rates, Fees and Cost Calculation
Lawsuit loans can be expensive as compared to other types of financing. The reason is that there is significantly more risk taken on by the “lawsuit lender”.
Car accident lawsuit loan repayment after recovery considers any processing fees and the use of a percentage rate in calculating the amount based on time. Plaintiffs do not make payments over time and pay off the advance. Instead, the payoff amount must be paid in full in one installment generally.
Car Accident Lawsuit Loan Rate Types
Car accident settlement loan companies structure their rates in two ways.
One type calculates repayment by charging a monthly percentage rate on the contract amount. The next month the percentage rate is charged on the previous month’s balance. Because this calculation charges interest on the balance (which also included the accrued “interest”), the charges are said to “compound” monthly.
The second type of charge applies a percentage rate on the original contract amount in 6 month increments. This non-compounding rate structure is also known as “simple” interest” because it does not compound on the balance.
Payoffs for the compounding rate structure are generally less in the first six months. There is little difference in these two lawsuit loan repayment types if the advance is repaid within two years. After two years, compounding repayment amounts are generally larger than simple interest repayments.
Lawsuit loan rate comparisons can be a great source of information. You can also use a lawsuit loan payoff calculator and define your own terms. The real difference in cost can be seen after 2 years post contract.
Auto Accident Lawsuit Loans and Other Case Types
The following types of cases are routinely advanced money prior to settlement.
- Auto Accidents
- Slip/Trip and Fall Cases
- Workers’ Compensation (Workers’ Comp)
- Dog Bites
- FELA (Railroad Workers)
- Jones Act (Maritime Injury)
- Medical Malpractice
- Nursing Home Negligence
- Product Liability
- Wrongful Death
- And more . . .
The most common lawsuit loan is the auto accident lawsuit loan. These are the easiest cases to qualify for because liability is easily established, and insurance coverage information is generally available.
Car accident lawsuit loan approvals generally depend on a multitude of factors. These might include the following:
- Jurisdiction (state and county)
- Case type (car accident, slip and fall, medical malpractice, etc.
- Reputation of counsel
- Availability of documents
- Insurance coverage
- Stage of proceedings
- And other factors.
Additionally, for all car accident lawsuit loans, plaintiffs must be represented by counsel. As stated previously, without the presence of the attorney, there is no lawsuit funding.
Getting a Car Accident Lawsuit Loan
If you were involved in a car accident, have an attorney and want to get cash prior to settlement, Fair Rate Funding can help you!
We work with our car accident clients to secure advances with the best possible terms. We are a direct lender so whenever possible, we pass the savings along to you.
Car accidents often cause both physical and financial hardship. If you have any questions regarding lawsuit loans, lawsuit funding, or another type of legal financing, please do not hesitate to contact us at 888-964-2224. We are here to help you get what you need, when you need it. Use lawsuit loans to pay for living expenses, case costs, medical care or any other need. When financial strain forces you to consider accepting less than you deserve, don’t wait – call Fair Rate and let us help you.
Thank you for your interest in lawsuit settlement funding.