A legal battle is costly and can financially strain your family. While waiting for your settlement, you can apply for a loan or pre-settlement legal funding to help alleviate the stress. These two financing options are usually considered when people face a legal battle and need financial assistance for lost wages or medical expenses. Understanding the difference between the options and how they can apply to your financial situation is essential. Finance options can be a lifeline for accident and injury victims who need fast cash. At Triumph Legal Funding, we provide legal funding to clients without high fees or hidden penalties.
What is Legal Funding?
Accident victims cannot afford to wait for their cases to close, which could take months or years before they receive financial compensation. At Triumph Legal Funding, we provide funding to attorneys and injury victims so that victims do not have to settle for a low amount. Legal funding is a cash advance where the amount is based on the potential settlement and the client’s financial needs.
This flexible financing enables the clients to cover all court costs, medical bills, and even medical expenses while the case is open. Repayment for legal funding happens only after the case is entirely resolved, and if your case is successful, your attorney is responsible for repaying the lender from the proceeds. More importantly, if you lose the case, you will not be required to repay the funds. Making the right financial choices can drastically affect your life while waiting for a lawsuit to settle.
Understanding Traditional Loans
A traditional bank loan provides you with the money you ask for and an agreement to repay the amount plus interest over a period of time. This can have a rigorous application process with credit checks, collateral, and disclosure of your financial history.
If you do get approved, there are usually restrictions on what the money can be used for. While the interest rates for traditional bank loans may be lower than legal funding, if you lose your case, you still have to repay everything, and if you fail to repay on time, the penalties can be severe.
Key Differences Between Legal Funding and Traditional Loans
During this difficult time, determining your financial needs is the first step when deciding between a legal funding loan or a traditional bank loan. While they both provide the financial resources needed, they come with different criteria that can affect your life.
Application Process
Legal funding primarily considers the legal case’s merit and ability to win sizable settlements. If the lender determines that your case will likely win, they will extend an offer.
Traditional bank loans usually require a credit check and a complete evaluation of your financial situation, influencing the approval process.
Repayment
Legal funding repayment is contingent on the case winning, and if you lose, you usually do not owe anything back.
Traditional loans require regular monthly payments soon after the loan is issued with interest.
Impact on Your Credit Score
Legal funding loans do not need to check your credit score for approval, and they also do not show up on your credit score.
Traditional bank loans usually require a hard credit check during the application, which can lower your score up to 10 points. Then, if the loan is approved, your credit score will get another few deductions as you now have a loan to repay. This hard inquiry will continue to impact your credit score for up to two years.
The benefits that pre-settlement legal funding brings to this difficult time in your life greatly outweigh a traditional bank loan. You must choose which is best for your current financial situation and how it will impact your financial stability in the long run.
Benefits of Choosing Legal Funding
The most significant benefit to legal funding is that it relieves financial pressures you may face while waiting to hold those accountable for your injuries. Insurance companies know that most people cannot wait for months or even years for a claim to settle and receive compensation, so they will often offer lower settlements than you deserve.
Pre-settlement legal funding can benefit your case with:
- Prevent unnecessary debt
- Allows your attorney time to work on your case or take it to trial
- Avoid the pressure to take a settlement
- Doesn’t impact your credit
- You only pay if your case wins
- Your attorney handles the repayment
Don’t settle for less than your case is worth. In the midst of a lawsuit, you can trade the stress and uncertainty for the security of financial stability now. That is the difference that pre-settlement legal funding can bring to your life while you are waiting for your compensation.
How Triumph Legal Funding Can Help
At Triumph Legal Funding, our process can put cash in hand in as little as 24 hours, ensuring that your case can continue to hold those accountable and you receive the maximum compensation you deserve. We aim to level the playing field so you don’t settle for less or have to start repaying a traditional bank loan that harms your credit score. Contact us today if you need cash before your case is settled to discuss your options.