If you have been injured and are planning on moving forward with a personal injury case, there’s a real chance that your financial situation takes a major hit. You may have medical bills piling up, and if your injuries have left you unable to work, you may wonder how you are going to make ends meet. In these instances, you may think about turning to what’s known as a pre-settlement loan.
As the name implies, a pre-settlement loan offers an individual a set amount of money to help with bills and other expenses with the understanding that the loan will be paid back in full once you win your injury case. It may sound like a good deal, but you really need to make sure you understand what you’re getting into before you agree to one. Below, we take a closer look at these pre-settlement loans.
Should I Get A Pre-Settlement Loan?
We can’t speak for every person in every single situation, but the vast majority of the time there are better options than moving forward with a pre-settlement loan. Yes, they may advertise that you don’t have to pay back the loan in the event you lose your case, so it may seem like free money, but oftentimes there are a number of strings attached that aren’t all that obvious. For starters, these companies only take cases that look like slam dunks, and that makes sense if they are going to give out tens of thousands of dollars or more. It’s not exactly a safety net in case you don’t win your case, because it is incredibly unlikely that they would agree to a case that isn’t for sure going to result in a payday.
However, the more predatory actions come when taking a closer look at the loan agreement. These pre-settlement loans don’t have a lot of major oversight, meaning that these companies have the ability to play fast and loose with the loan terms and interest rates. You need to make sure that you understand how much you’ll be charged to get this loan and how much it could end up costing you depending on how your case plays out.
Also, you’ll want to make sure that you understand how regularly interest occurs on your loan. Because they are considered a high-risk loan, interest may accrue immediately and monthly as opposed to yearly. Again, this means a short-term loan can become quite expensive in a hurry.
And finally, because they know that most people would be hesitant to agree to a pre-settlement loan if they completely understood what they were agreeing to, oftentimes the details of your loan are hidden in the fine print in the middle of a text-heavy agreement. Take some time to read over every word in your loan agreement, and even if you believe that you understand what you’re agreeing to, make sure you run it by your lawyer before signing off. Oftentimes your lawyer can help provide alternative solutions to your financial situation so that you don’t end up in what could turn out to be a predatory situation.
We understand that money can get tight if an injury forces you out of work, but don’t fall for a predatory pre-settlement loan that sees a small loan snowball into a major payment because of the terms and high interest rate. We want you to keep as much of your injury award as possible, and you won’t be able to if you agree to a predatory pre-settlement loan. If you have any questions about a pre-settlement loan, or you want to learn some ways to financially prepare for an injury award settlement, check out this blog or give the team at Margolis Law Office a call today at (952) 230-2700.