Car Accident Loans & Pre-Settlement Funding: An Overview
After a car accident, loans and pre-settlement funding may not be at the top of your list of priorities. But it’s still important to know your options!
Did a car accident throw your back out of whack?
Anywhere from 250,000 to 500,000 people worldwide have a spinal cord injury each year. Oftentimes, the injuries are the result of some type of trauma, like a car accident.
As you wait for a settlement award, it’s easy to feel as if your entire world is crumbling. Simple tasks like paying bills, or going to work, quickly become impossible tasks. Thankfully, you can apply for pre-settlement funding after an auto accident to help keep you afloat. However, car accident loans aren’t right for everyone.
What is presettlement funding, and is it the right choice for you? Read on to find out!
How Lawsuit Loans Work
How do lawsuit loans work exactly? A lawsuit loan comes from a third party that’s willing to lend you the money based on the details of your case.
Around 20 to 50 million Americans experience non-fatal car accident injuries every year. If you were in a car accident, and it wasn’t your fault, you could file a personal injury claim against the at-fault driver.
Let’s say you’re in line to receive $100,000 from the personal injury claim. A pre-settlement funding company might be willing to give you an advance on your claim payout. The amount of the advance will vary from one company to the next as they assess your case and financial situation.
Applying for Car Accident Loans
How do you apply for car accident loans? First, you’ll need to complete an online application. After completing the initial application, a loan representative will call you to get all of the specifics about your case. Next, you’ll begin the pre-settlement funding process, and a request will be sent to your lawyer.
The funding company will request your lawyer submits relevant documentation surrounding your case. Once the documentation’s in place the pre-settlement funding company can begin a case evaluation. Case evaluations are free and allow funding companies to determine the risk they’ll incur if they decide to give you a loan.
Case evaluations typically take 2 days. After being approved by the underwriting team, a funding contract will be created for you and your attorney to sign.
Timeline for Receiving Funds
One of the best parts about receiving a lawsuit loan is the turnaround time. It’s not uncommon to apply for a loan and receive funds within 48 hours. However, it’s crucial that your attorney promptly replies to the request for documentation. Failing to provide the appropriate documentation can delay your payout, or cause loan denial.
Amount You Qualify For
How much money will you qualify for when you apply for a lawsuit loan? The answer varies, depending on your case and current financial situation.
Lending companies are going to look at the total award amount you could receive, before deciding how much you’re eligible to borrow. The higher your expected claim payout, the more likely it’ll be you can secure a large loan.
However, if your current financial situation is lacking, you might not qualify for the amount you need. For instance, employment is something the loan company will consider. While unemployment rates went down to 6.3% in January 2021, there’s still a lot of Americans without a job, thanks to the pandemic.
Unfortunately, if you’re unemployed, you might not qualify for a loan. The concern is that if you lose the case, you won’t have any way to repay the lender. However, car accident pre-settlement funding varies from case to case, so it’s always worth exploring your options.
Common Reasons For Loan Denial
There are a few different circumstances that can cause loan denial. First, you have to have enough equity in your case. Equity refers to the amount of money you’ll have leftover from eh claim payout, after covering your expenses. Next, funding companies are usually hesitant to give out loans to individuals who’ve maxed out their financing.
For instance, if you already have a couple of lawsuit loans out for your case, it’ll be difficult securing a third. Next, pre-settlement funding options for car accident cases are only available when you have a strong case. If there’s any chance you could be held liable for the accident, you probably won’t qualify for a loan.
Moving on, if your case is fresh it’s also possible you could experience a loan rejection. When a case is new, all of the necessary documents the loan company needs might not be available. Lastly, pre-settlement funding after an auto accident requires an attorney represents you.
Common Loan Fees
Now it’s time to dive into the different loan fees you should budget for. Here’s a shortlist of the different fees associated with lawsuit loans:
- Application fees
- Processing fees
- Origination fees
- Review fees
- Underwriting fees
Keep in mind that in addition to the loan fees, you’ll still need to budget for your attorney’s costs, and medical bills as well. The good news is that you won’t have to take on any out of pocket expenses when you apply for a loan.
Instead, you’ll be charged fees at origination. Monthly charges will be billed to your settlement advance. In the end, the claim payout covers all of the fees that grew while you were waiting for your case to resolve.
Mistakes to Avoid
Last but not least, let’s review some of the common mistakes people make when it comes to securing lawsuit loans. For starters, some people fail to realize that lawsuit loans work for more than just car accident cases. You can apply for a settlement advancement with workers’ compensation claims.
The state you live in will determine whether or not your worker’s compensation claim is eligible for funding. You can also request funding if you have a personal injury case that isn’t car accident-related. For instance, product and premise liability cases are great candidates for settlement loans.
Stay Financially Strong
As you can see, qualifying and applying for car accident loans is easy. As long as you have an attorney representing your case, you can begin the application process today. However, remember that if your case is still brand new, you might have to wait for the appropriate documents to become available.
If you still have questions about whether or not a lawsuit loan is right for you, let us help. Reach out to us today using our contact us page. Let us know all of your questions and a representative will be happy to answer them!