The Pros and Cons of Using Lawsuit Loan Services

Personal injury lawsuits can take months or even years. In the meantime, you may be unable to work, and could even find yourself faced with unusually high medical bills. To ease their financial burden, many people take out lawsuit loans. These loans allow people to have cash right away, and are not payable until there is a settlement. This practice has its advantages and disadvantages, which is why you should carefully weigh the pros and cons of a lawsuit loan when making your decision.

How Lawsuit Loans Work

The process begins with an application, which will provide the lender with information about the case. This information is used to assess the strength of the case, as well as an estimate of the settlement. If the lender believes the case is strong, an offer will then be made. Upon accepting the offer, you will receive a check for the agreed-upon amount. This amount plus any applicable fees is not payable until after there is a settlement.


The majority of lawsuit loans are available even to those with poor credit. Oasis Legal Finance estimates that approximately 85% of the funds they provide their customers goes to pay “immediate” living needs such as mortgage, rent and car payment. As such, they can extend a lifeline to people who are unable to obtain a traditional loan, yet find themselves needing large sums of cash to avoid foreclosure, eviction or repossession.

When payday loans are used for immediate financial relief, it helps the victim breathe easier. This in turn means that he or she is less likely to settle abruptly just to have a little cash. In some cases, a larger settlement might be possible, simply because the plaintiff had more time to negotiate with an insurance company.

Like attorney fees, lawsuit loans are only recovered if there is a settlement. This means that if you lose your case, you won’t have to pay back the money. Likewise, if you win less than the lender anticipated, the amount you pay back could be adjusted accordingly.


The biggest disadvantage to a lawsuit loan is fees. Many loans come with exorbitant fees that add up to as much as 100%. The reason why fees are so high is because the lawsuit loan industry is not regulated. In fact, the charges are considered “fees”, because adding interest charges would subject lenders to the same regulations as banks and other financial institutions.

The longer a case goes on, the more interest is charged, since it is typically compounded monthly. Borrowers are often discouraged after they settle their case only to find they have nothing left after paying attorney’s fees and repaying the loan.

Not all cases qualify for cash up front. Lenders are extremely picky as to which cases they accept, since there is a great deal of risk involved. Some borrowers make as many as five or six applications before finding a lawsuit funder who is willing to accept their case.

Lawsuit loan applications are lengthy and time consuming to complete. What’s more, they often require information directly from attorneys themselves. When lawyers spend time filling out loan applications, they are unable to focus their attention toward building a legal strategy, and this is something that could ultimately affect your settlement as well.

The decision to take out a lawsuit loan is one that should be made only after all of your other resources have been considered. If you do take out one, borrow only the amount you need to help you avoid a catastrophe such as foreclosure. That way, you can enjoy some quick cash now and hopefully still have some left over once you finally do settle.