Many individuals who are in the midst of a personal injury lawsuit and money will apply for a loan in order to pay their monthly expenses until their case is settled or they win a judgment. These are often referred to as “personal injury lawsuit loans.” While they are a quick source of needed cash, they are not always the smartest choice you can make when it comes to staying afloat financially.
The Role of the Personal Injury Lawyer
When a client applies for a personal injury lawsuit loan, their lawyer must cooperate with the lender. In fact, in most cases, they must promise to repay the loan and are required to sign an agreement. Furthermore, it is their responsibility to inform the loan company as to the potential amount of the claim. Despite the personal injury lawyer’s role in St. Albert in all of this, guarantees that the client will win their case and a settlement will eventually be reached.
Disadvantages of Personal Injury Lawsuit Loans
Regardless of the amount of money that is awarded to the plaintiff in a personal injury case, the loan company gets paid first. Once the loan is paid in full, the personal injury lawyer gets his or her percentage of the settlement award (their contingency fee). If there is any money left at this point, this is what the client receives as settlement in their case. Keep in mind that the repayment of a personal injury lawsuit loan has no bearing on your credit score.
Even if you are in dire financial straits, a personal injury lawsuit loan may not be the best idea. The following is a list of the disadvantages of personal injury lawsuit loans:
• First and foremost, finding a reputable lender that treats everyone fairly can be difficult so you should spend some time researching the lenders you are considering.
• Personal injury lawsuit loans can be very expensive with interest rates averaging from 30% up to 60% or more.
• Some personal injury cases may not qualify for a personal injury lawsuit loan.
• Unlike auto loans and mortgage loans, personal injury lawsuit loans are not subjected to the same level of federal and state government regulations.
The bottom line is that personal injury lawsuit loans are not the right choice when you need financial help. Be sure to discuss this with a personal injury lawyer before you start applying for a personal injury lawsuit loan.